PARKE BANCORP, INC. |
(Exact name of Registrant as specified in its Charter) |
New Jersey | 65-1241959 | |
(State or other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) |
601 Delsea Drive, Washington Township, New Jersey | 08080 | |
(Address of Principal Executive Offices) | (Zip Code) |
Title of Each Class | Trading Symbol | Name of Each Exchange on Which Registered |
Common Stock, $0.10 par value | PKBK | The Nasdaq Stock Market LLC |
Large accelerated filer o | Accelerated filer ý | Non-accelerated filer o | Smaller reporting company ý | Emerging growth company o |
1. | Portions of the Annual Report to Shareholders for the Fiscal Year Ended December 31, 2019 (Parts II and IV) |
2. | Portions of the Proxy Statement for the 2020 Annual Meeting of Shareholders. (Part III) |
PART 1 | Page | |
Item 1. | Business | |
Item 1A. | Risk Factors | |
Item 1B. | Unresolved Staff Comments | |
Item 2. | Properties | |
Item 3. | Legal Proceedings | |
Item 4. | Mine Safety Disclosures | |
PART II | ||
Item 5. | Market for Common Equity, Related stockholder Matters and Issuer Purchases of Equity Securities | |
Item 6. | Selected Financial Data | |
Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | |
Item 7A. | Quantitative and Qualitative Disclosures About Market Risk | |
Item 8. | Financial Statements and Supplementary Data | |
Item 9. | Changes and Disagreements with Accountants on Accounting and Financial Disclosure | |
Item 9A. | Controls and Procedures | |
Item 9B. | Other Information | |
PART III | ||
Item 10. | Directors, Executive Officers and Corporate Governance | |
Item 11. | Executive Compensation | |
Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | |
Item 13. | Certain Relationships and Related Transactions, and Director Independence | |
Item 14. | Principal Accountant Fees and Services | |
PART IV | ||
Item 15. | Exhibits and Financial Statement Schedules | |
Item 16. | Form 10-K Summary | |
Signatures |
Item 1. | Business |
At December 31, | |||||||||||||||||||
2019 | 2018 | 2017 | 2016 | 2015 | |||||||||||||||
(Amounts in thousands, except percentages) | |||||||||||||||||||
Loans accounted for on a non-accrual basis: | |||||||||||||||||||
Commercial and Industrial | $ | 286 | $ | 14 | $ | 17 | $ | 159 | $ | 740 | |||||||||
Construction | 1,365 | 1,365 | 1,392 | 3,241 | 5,204 | ||||||||||||||
Real Estate Mortgage: | |||||||||||||||||||
Commercial - Owner Occupied | 2,702 | — | 155 | 430 | 358 | ||||||||||||||
Commercial - Non-Owner Occupied | 70 | — | 597 | 3,958 | 4,002 | ||||||||||||||
Residential - 1 to 4 Family | 925 | 1,686 | 2,292 | 3,095 | 3,255 | ||||||||||||||
Residential – Multifamily | — | — | — | 308 | — | ||||||||||||||
Consumer | — | — | 81 | 107 | — | ||||||||||||||
Total non-accrual loans | 5,348 | 3,065 | 4,534 | 11,298 | 13,559 | ||||||||||||||
Accruing loans delinquent 90 days or more: | |||||||||||||||||||
Commercial and Industrial | — | — | — | — | — | ||||||||||||||
Construction | — | — | — | — | — | ||||||||||||||
Real Estate Mortgage: | |||||||||||||||||||
Commercial - Owner Occupied | — | — | — | — | — | ||||||||||||||
Commercial - Non-Owner Occupied | — | — | — | — | — | ||||||||||||||
Residential - 1 to 4 Family | — | — | — | — | — | ||||||||||||||
Residential – Multifamily | — | — | — | — | — | ||||||||||||||
Consumer | — | — | — | — | — | ||||||||||||||
Total | — | — | — | — | — | ||||||||||||||
Total non-performing loans | $ | 5,348 | $ | 3,065 | $ | 4,534 | $ | 11,298 | $ | 13,559 | |||||||||
Total non-performing loans as a percentage of loans | 0.38 | % | 0.25 | % | 0.45 | % | 1.30 | % | 1.79 | % |
Loan Balance | |||
(Amounts in thousands) | |||
OAEM | $ | 5,195 | |
Substandard | 11,751 | ||
$ | 16,946 |
For the Year Ended December 31, | |||||||||||||||||||
2019 | 2018 | 2017 | 2016 | 2015 | |||||||||||||||
(Dollars in thousands) | |||||||||||||||||||
Balance at beginning of the period | $ | 19,075 | $ | 16,533 | $ | 15,580 | $ | 16,136 | $ | 18,043 | |||||||||
Charge-offs: | |||||||||||||||||||
Commercial and Industrial | — | (128 | ) | (134 | ) | (76 | ) | (1,554 | ) | ||||||||||
Construction | — | (27 | ) | (687 | ) | (1,081 | ) | (2,983 | ) | ||||||||||
Real Estate Mortgage: | |||||||||||||||||||
Commercial - Owner Occupied | — | — | (430 | ) | — | — | |||||||||||||
Commercial - Non-Owner Occupied | — | (49 | ) | (622 | ) | (154 | ) | (638 | ) | ||||||||||
Residential - 1 to 4 Family | (56 | ) | — | (118 | ) | (704 | ) | (504 | ) | ||||||||||
Residential – Multifamily | — | — | (50 | ) | (45 | ) | — | ||||||||||||
Consumer | — | (19 | ) | — | (6 | ) | (1 | ) | |||||||||||
Total charge-offs: | (56 | ) | (223 | ) | (2,041 | ) | (2,066 | ) | (5,680 | ) | |||||||||
Recoveries: | |||||||||||||||||||
Commercial and Industrial | 16 | 47 | 45 | 8 | 121 | ||||||||||||||
Construction | 6 | 600 | — | — | — | ||||||||||||||
Real Estate Mortgage: | |||||||||||||||||||
Commercial - Owner Occupied | 26 | 189 | 113 | 1 | 66 | ||||||||||||||
Commercial - Non-Owner Occupied | 39 | 86 | 319 | — | 398 | ||||||||||||||
Residential - 1 to 4 Family | 5 | 43 | 17 | 39 | 148 | ||||||||||||||
Residential - Multifamily | — | — | — | — | — | ||||||||||||||
Consumer | — | — | — | — | — | ||||||||||||||
Total recoveries: | 92 | 965 | 494 | 48 | 733 | ||||||||||||||
Net charge-offs | 36 | 742 | (1,547 | ) | (2,018 | ) | (4,947 | ) | |||||||||||
Provision for loan losses | 2,700 | 1,800 | 2,500 | 1,462 | 3,040 | ||||||||||||||
Balance at end of period | $ | 21,811 | $ | 19,075 | $ | 16,533 | $ | 15,580 | $ | 16,136 | |||||||||
Period-end loans outstanding (net of deferred costs/fees) | $ | 1,420,749 | $ | 1,241,157 | $ | 1,011,717 | $ | 851,953 | $ | 758,501 | |||||||||
Average loans outstanding | $ | 1,326,691 | $ | 1,110,915 | $ | 923,271 | $ | 800,677 | $ | 731,032 | |||||||||
Allowance as a percentage of period end loans | 1.54 | % | 1.54 | % | 1.63 | % | 1.83 | % | 2.13 | % | |||||||||
Loans charged off as a percentage of average loans outstanding | — | % | 0.02 | % | 0.22 | % | 0.26 | % | 0.78 | % |
December 31, | |||||||||||
2019 | 2018 | 2017 | |||||||||
(Amounts in thousands, except rates) | |||||||||||
Amount outstanding at year end | $ | 134,650 | $ | 104,650 | $ | 114,650 | |||||
Weighted average interest rates at year end | 2.41 | % | 2.67 | % | 1.76 | % | |||||
Maximum outstanding at any month end | $ | 134,650 | $ | 134,650 | $ | 114,650 | |||||
Average outstanding | $ | 107,795 | $ | 105,883 | $ | 91,705 | |||||
Weighted average interest rate during the year | 2.79 | % | 2.00 | % | 1.53 | % |
Item 1A. | Risk Factors |
Item 1B. | Unresolved Staff Comments |
Item 2. | Properties |
(a) | Properties. |
Item 3. | Legal Proceedings |
Item 4. | Mine Safety Disclosures |
Item 5. | Market for Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |
(a) | The information contained under the section captioned “Common and Preferred Stocks” in the Company’s 2019 Annual Report filed as Exhibit 13 hereto (the "Annual Report") is incorporated herein by reference. |
(b) | Not applicable. |
(c) | There were no repurchases of shares of the Company’s Common Stock during the last quarter of 2019. |
Item 6. | Selected Financial Data |
Item 7. | Management's Discussion and Analysis of Financial Condition and Results of Operations |
Item 7A. | Quantitative and Qualitative Disclosures About Market Risk |
Item 8. | Financial Statements and Supplementary Data |
Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure |
Item 9A. | Controls and Procedures |
Item 9B. | Other Information |
Item 10. | Directors, Executive Officers and Corporate Governance |
Item 11. | Executive Compensation |
Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
Equity compensation plans approved by shareholders | ( a ) Number of Securities to be issued upon exercise of outstanding options | ( b ) Weighted-average exercise price of outstanding options | ( c ) Number of securities remaining available for issuance under equity compensation plans (excluding securities reflected in column (a)) | ||
2015 Equity incentive plan | 270,676 | 14.80 | 357,203 | ||
Total | 270,676 | $14.80 | 357,203 |
Item 13. | Certain Relationships and Related Transactions, and Director Independence |
Item 14. | Principal Accountant Fees and Services |
Item 15. | Exhibits and Financial Statement Schedules |
1 | The following financial statements and the independent auditors’ report included in the Annual Report are incorporated herein by reference: | |
• | Management’s Report on Internal Controls | |
• | Report of Independent Registered Public Accounting Firm Regarding Internal Controls | |
• | Report of Independent Registered Public Accounting Firm | |
• | Consolidated Balance Sheets as of December 31, 2019 and 2018 | |
• | Consolidated Statements of Income for the Years Ended December 31, 2019 and 2018 | |
• | Consolidated Statements of Equity for the Years Ended December 31, 2019 and 2018 | |
• | Consolidated Statements of Cash Flows for the Years Ended December 31, 2019 and 2018 | |
• | Notes to Consolidated Financial Statements | |
2 | Schedules omitted as they are not applicable. | |
3 | The following exhibits are included in this Report or incorporated herein by reference: | |
3.1 | ||
3.2 | ||
3.3 | ||
4.1 | ||
4.2 | ||
10.1 | ||
10.2 | ||
10.7 | ||
10.8 |
10.9 | ||
10.10 | ||
10.11 | ||
10.12 | ||
10.13 | ||
13 | ||
21 | ||
23 | ||
31.1 | ||
31.2 | ||
32 | ||
101.INS | XBRL Instance Document * | |
101.SCH | XBRL Schema Document * | |
101.CAL | XBRL Calculation Linkbase Document * | |
101.LAB | XBRL Labels Linkbase Document * | |
101.PRE | XBRL Presentation Linkbase Document * | |
101.DEF | XBRL Definition Linkbase Document * |
* | Submitted as Exhibits 101 to this Form 10-K are documents formatted in XBRL (Extensible Business Reporting Language). |
(1) | Incorporated by Reference to the Company’s Current Report on Form S-4 filed with the SEC on January 31, 2005. |
(2) | Incorporated by Reference to Company’s Current Report on Form 8-K filed with the SEC on December 24, 2013. |
(3) | Incorporated by Reference to Company’s Registration Statement on Form 8-K filed with the SEC on July 20, 2016. |
(4) | Incorporated by Reference to Company's Current Report on Form S-8 filed with the SEC on November 16, 2015. |
(5) | Incorporated by Reference to Company's Current Report on Form 8-K filed with the SEC on January 22, 2016. |
PARKE BANCORP, INC. | |||||
Dated: March 13, 2020 | /s/ Vito S. Pantilione | ||||
By: | Vito S. Pantilione President, Chief Executive Officer and Director | ||||
Pursuant to the requirement of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated on March 13, 2020. | |||||
/s/ Celestino R. Pennoni | /s/ Vito S. Pantilione | ||||
Celestino R. Pennoni | Vito S. Pantilione | ||||
Chairman of the Board and Director | President, Chief Executive Officer and Director | ||||
/s/ Arret F. Dobson | /s/ Anthony Jannetti | ||||
Arret F. Dobson | Anthony Jannetti | ||||
Director | Director | ||||
/s/ Jack C. Sheppard, Jr. | /s/ Daniel J. Dalton | ||||
Jack C. Sheppard, Jr. | Daniel J. Dalton | ||||
Director | Director | ||||
/s/ Fred G. Choate | /s/ Edward Infantolino | ||||
Fred G. Choate | Edward Infantolino | ||||
Director | Director | ||||
/s/ Jeffrey H. Krippitz | /S/ Elizabeth A. Milavsky | ||||
Jeffrey H. Krippitz | Elizabeth Milavsky | ||||
Director | Director | ||||
/s/ John F. Hawkins | |||||
John F. Hawkins | |||||
Senior Vice President and Chief Financial Officer | |||||
(Principal Financial and Accounting Officer) |
• | a company and any controlling stockholder, partner, trustee or management official of the company if both the company and person own voting securities in the bank holding company; |
• | an individual and the individual’s immediate family; |
• | companies under common control; |
• | persons that are party to any agreement, contract, understanding, relationship or other arrangement, written or otherwise, regarding the acquisition, voting or transfer of control of voting securities of a bank holding company other than through a revocable proxy; |
• | persons that have made or propose to make a joint filing under Section 13 or 14 of the Exchange Act; and |
• | a person and any trust for which the person serves as trustee. |
1. | Definitions. |
a. | Cause. For purposes of this Agreement, “Cause”, with respect to the termination by the Employer of the Executive’s employment shall mean (i) the willful and continued failure by the Executive to perform his or her |
b. | Change in Control. “Change in Control” shall mean the occurrence of any of the following events: |
c. | Contract Period. “Contract Period” shall mean the period commencing on the business day immediately preceding a Change in Control and ending on the earlier of (i) the second anniversary of the date of the Change in Control, or (ii) the death of the Executive. |
d. | Employer. “Employer” shall mean the Company and/or the Bank, whichever entity that shall employ the Executive from time to time, and any successor entity thereto. |
e. | Good Reason. When used with reference to a voluntary termination by the Executive of his or her employment with the Employer, “Good Reason” shall mean any of the following, if taken without the Executive’s express written consent: |
2. | Employment. The Employer hereby agrees to employ the Executive, and the Executive hereby accepts such employment, during the Contract Period upon the terms and conditions set forth herein. The Company and the Bank may, in the exercise of their sole discretion, transfer the Executive’s employment relationship from the Bank to the Company, or from the Company to the Bank, in which case the transferee employer shall be the Employer for all purposes of this Agreement. The transfer of the Executive’s employment relationship between the Bank and the Company shall not be deemed to be either an actual or constructive termination of the Executive or “Good Reason” for any purpose of this Agreement, and the Executive’s employment shall be deemed to have continued without interruption for all purposes of this Agreement. |
3. | Job Position. During the Contract Period, the Executive shall be employed in the Officer Position with the Company and the Bank, or such other corporate or divisional profit center as shall then be the principal successor to the business, assets and properties of the Bank, with a comparable position title and comparable professional job duties, responsibilities and required experience and skill level as were in effect before the Change in Control. The Executive shall devote his or her full time professional effort and attention to the business of the Employer, and shall not, during the Contract Period, be engaged in any other business activity without the written consent of the Employer. |
4. | Cash Compensation. The Employer shall pay to the Executive compensation for his or her services during the Contract Period as follows: |
a. | Base Compensation. The base compensation shall be equal to not less than such annual compensation, including both salary and bonus, as was paid to or accrued by, or for the benefit of, the Executive in the twelve (12) months immediately prior to the Change in Control. The annual salary portion of base compensation shall be payable in installments in accordance with the |
b. | Annual Increase. During the Contract Period, the Board of Directors of the Employer shall review not less than annually, the Executive’s compensation and shall award him or her additional compensation to reflect the Executive’s performance and the performance of the Employer and the Company corporate group, and competitive compensation levels, all as determined in the discretion of the Board of Directors of the Employer. |
5. | Expenses and Fringe Benefits. During the Contract Period, the Executive shall be entitled to reimbursement for all business expenses incurred by him or her with respect to the business of the Employer in the same manner and to the same extent as such expenses were previously reimbursed to him or her immediately prior to the Change in Control. If prior to the Change in Control, the Executive was entitled to the use of an automobile, he or she shall continue to be entitled to the same use of an automobile at least comparable to the automobile provided to him or her prior to the Change in Control, and he or she shall be entitled to vacation leave and sick days, in accordance with the practices and procedures of the Employer, as such existed immediately prior to the Change in Control. During the Contract Period, the Executive also shall be entitled to hospital, health, medical and life insurance, and any other material benefits enjoyed, from time to time, by executive officers of the Employer, all upon terms as favorable as those enjoyed by other executive officers of the Employer. Notwithstanding anything in this section to the contrary, if the Employer adopts any change in the expenses allowed to, or fringe benefits provided for, executive officers of the Employer, and such policy is uniformly applied to all executive officers of the Employer, and any successor or acquirer of the Employer, if any, including the chief executive officer of such entities, then no such change in policy shall be deemed to be a violation of this provision. |
6. | Termination for Cause. At all times, including both before and during the Contract Period, the Employer shall have the right to terminate the Executive for Cause, upon written notice to him or her of the termination, which notice shall specify the reasons for the termination. In the event of termination for Cause, the Executive shall not be entitled to any further benefits under this Agreement. |
7. | Disability. During the Contract Period, if the Executive becomes permanently and totally disabled within the meaning of the Social Security Act, the Employer may terminate the employment of the Executive. In which event, the Executive shall not be entitled to any further benefits under this Agreement other than payments under |
8. | Death Benefits. Upon the Executive’s death during the Contract Period, the Executive shall be entitled to the benefits of any life insurance policy or supplemental executive retirement plan paid for, or maintained by, the Employer, but his estate shall not be entitled to any further benefits under this Agreement. |
1. | Termination without Cause or Resignation for Good Reason. |
a. | The Employer may terminate the Executive without Cause during the Contract Period by giving the Executive not less than four weeks’ prior written notice to the Executive. During the Contract Period, the Executive may resign within 90 days following the initial occurrence of a condition constituting a Good Reason upon giving not less than four weeks’ prior written notice to the Employer specifying the condition constituting Good Reason. The date of termination of employment for Good Reason shall be no later than twenty-four months following commencement of the Contract Period. If the Employer terminates the Executive’s employment during the Contract Period without Cause or if the Executive resigns for Good Reason, the Employer shall, upon such termination of employment, pay the Executive a lump sum amount equal to 250% times the average of the annualized compensation, comprised of annualized salary and cash incentive or bonus compensation, paid or accrued to the Executive during the thirty-six month period (or such lesser number of months of actual employment) immediately prior to the Change in Control (the “Lump Sum Payment”). Notwithstanding the foregoing, any notice of resignation for Good Reason during the Contract Period furnished by the Executive to the Employer shall not be effective prior to the date that is three months following the date of the Change in Control, and the Executive shall continue to work through such three month period, unless the Employer shall agree in writing to an earlier effective date of such resignation. |
b. | For a period of eighteen (18) months following the effective date of such termination of employment following a Change in Control, whether resulting from without Cause termination initiated by the Employer or for Good Reason initiated by the Executive, the Employer shall continue to provide the Executive with and pay the applicable premiums for medical and hospital insurance, disability insurance and life insurance benefits, as were provided and paid for at the time of the termination of his employment with the Employer; provided that, if at any time during such eighteen month period, the Executive becomes employed by another employer which provides one or more such benefits, the Employer shall, immediately and from the date when such benefits are made available to the Executive by the successor employer, be relieved of its obligation to provide such benefits to the extent such benefits are duplicative of what is provided to the Executive by the Executive’s new employer. If the Employer cannot provide the benefits set forth in this Section 9(b) because Executive is no longer an employee and applicable rules and regulations prohibit the continuation |
c. | The Executive shall not have a duty to mitigate the damages suffered by him or her in connection with the termination by the Employer of his employment without Cause or a resignation for Good Reason during the Contract Period. If the Employer fails to pay the Executive the Lump Sum Payment or to provide him or her with the benefits due under this Section 9, the Executive, after giving ten (10) days’ written notice to the Employer identifying the Employer’s failure, shall be entitled to recover from the Employer all of his reasonable legal fees and expenses incurred in connection with his or her enforcement against the Employer of the terms of this Agreement. The Employer agrees to pay such legal fees and expenses to the Executive on demand. The Executive shall be denied payment of his or her legal fees and expenses only if a court finds that the Executive sought payment of such fees without reasonable cause and in bad faith. |
10. | Resignation without Good Reason. The Executive shall be entitled to resign from the employment of the Employer at any time during the Contract Period without Good Reason, but upon such resignation, the Executive shall not be entitled to any additional compensation for the time after which he or she ceases to be employed by the Employer, and shall not be entitled to any of the other benefits provided for herein, except as may otherwise be provided by the terms of such other plans or arrangements of the Employer or in accordance with applicable law. No such resignation shall be effective unless in writing with four weeks’ notice thereof. |
11. | Restrictions and Limitations on Executive Conduct. |
a. | Non-Disclosure of Confidential Information. Except in the course of his or her employment with the Employer and in pursuit of the business of the Company, the Bank or any of their subsidiaries or affiliates, the Executive shall not, at any time during or following the Contract Period, disclose or use for any purpose any confidential information or proprietary data of the Company, the Bank or any of their respective subsidiaries or affiliates. The |
b. | Covenant Not to Compete. The Executive agrees that for a period of twelve months following termination of employment in conjunction with or after a Change in Control, the Executive shall not become employed or retained by, directly or indirectly, any FDIC insured depository institution whereby the Executive shall have a new work location that is within 15 miles of any branch or office of the Bank in existence as of the date of the Change in Control. The Executive acknowledges that the terms and conditions of this restrictive covenant are reasonable and necessary to protect the Company, its subsidiaries, its affiliates, and any successors in interest, and that the Employer’s tender of compensation under this Agreement is fair, adequate and valid consideration in exchange for his or her promises and restrictions under this subparagraph of this Agreement. The Executive further acknowledges that his knowledge, skills and abilities are sufficient to permit him or her to earn a satisfactory livelihood without violating the provisions of this subparagraph. |
c. | Non-Solicitation of Business. The Executive agrees that for a period of one year following termination of employment in conjunction with or after a Change in Control, the Executive shall not contact (with a view toward selling any product or service competitive with any product or service sold or proposed to be sold by the Company, the Bank or any successors thereto (“Companies”)) any person, firm, association or corporation (a) to which the Companies sells any product or service, (b) which the Executive solicited, contacted or otherwise dealt with on behalf of the Companies, or (c) which the Executive is otherwise aware is a client of the Companies. During such one-year period, the Executive will not directly or indirectly make any such contact, either for his own benefit or for the benefit of any other person, firm, association, or corporation. |
d. | Non-Solicitation of Employees. The Executive agrees that for a period of one year following termination of employment in conjunction with or after a Change in Control, the Executive shall not contact, on his or her own behalf or on behalf of others, employ, solicit, or induce, or attempt to employ, solicit or induce, any employee of the Companies for purposes of employment or other business relationship with any other business entity, nor will the Executive directly or indirectly, on his behalf or for others, seek to influence any Companies’ employee to leave the employ of the Companies. |
e. | Specific Performance and Severability. The Executive agrees that the Company and the Bank do not have an adequate remedy at law for the breach of this Section 11 and agrees that he or she shall be subject to injunctive relief |
f. | Survival. This Section 11 shall survive the termination or resignation of the Executive’s employment during the Contract Period for any reason and the expiration of this Agreement. |
12. | Term and Effect Prior to Change in Control. |
a. | Term. Except as otherwise provided for herein, this Agreement shall commence on the Effective Date hereof and shall remain in effect for a period of two (2) years thereafter (the “Term”) or until the end of the Contract Period, whichever is later. The Term shall be automatically extended for an additional one (1) year period on each annual anniversary date of the Effective Date, unless the Board of Directors of the Employer then in office votes not to so extend such Term prior to each such annual anniversary date. The Executive shall be promptly notified of the passage of such a resolution on non-extension of such Term. In the event that the Contract Period shall not commence prior to the expiration of the Term of this Agreement, then this Agreement shall terminate upon the expiration of the Term, unless such Term shall be extended prior to its expiration. |
b. | No Effect Prior to Change in Control. This Agreement shall not, in any respect, affect any rights of the Employer or the Executive prior to a Change in Control, nor shall this Agreement affect or limit any rights of the Executive granted in accordance with any other agreement, plan or arrangement. The rights, duties and benefits provided hereunder shall only become effective upon the occurrence of a Change in Control, as defined in this Agreement. If the employment of the Executive is terminated by the Employer for any reason in good faith prior to a Change in Control, this Agreement shall thereafter be of no further force and effect. |
13. | Limitations under Section 280G. Notwithstanding the forgoing, all sums payable hereunder shall be reduced in such manner and to such extent so that no such payments made hereunder when aggregated with all other payments to be made to the Executive by the Company and the Bank shall be deemed an "excess parachute payment" in accordance with Section 280G of the Code, and thereby subjecting the Executive to the excise tax provided at Section 4999(a) of the Code. |
14. | Release in Favor of the Company Corporate Group. Notwithstanding anything herein to the contrary, such payment due in accordance with Section 9 herein shall be made to the Executive by the Employer on the date which is sixty (60) days following the date of Termination of Employment (the “Payment Date”); provided that the Executive shall have executed and delivered to the Employer within fifty |
15. | Severance Compensation and Benefits not in Derogation of Other Benefits. Subject only to those particular terms of this Agreement to the contrary, the payment or obligation to pay any monies, or the granting of any benefits, rights or privileges to the Executive as provided in this Agreement shall not be in lieu or derogation of the rights and privileges that the Executive now has or will have under any plans or programs of the Employer. |
16. | Miscellaneous. This Agreement shall be the joint and several obligation of the Company, the Bank and any acquiring entity(ies) which assumes the obligations of the Company and the Bank under this Agreement. The terms of this Agreement shall be governed by, and interpreted and construed in accordance with the provisions of, the laws of New Jersey and, to the extent applicable, Federal law. Except as specifically set forth in this Agreement, this Agreement supersedes all prior agreements and understandings with respect to the matters covered hereby. The amendment or termination of this Agreement may be made only in a writing executed by the Company, the Bank and the Executive, and no amendment or termination of this Agreement shall be effective unless and until made in such a writing. This Agreement shall be binding to the extent of its applicability upon any successor (whether direct or indirect, by purchase, merge, consolidation, liquidation or otherwise) to all or substantially all of the assets of the Company or the Bank. This Agreement is personal to the Executive, and the Executive may not assign any of his rights or duties hereunder, but this Agreement shall be enforceable by the Executive’s legal representatives, executors or administrators. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, and it shall not be necessary in making proof of this Agreement to produce or account for more than one such counterpart. The Company or the Bank, as the case may be, shall, as part of any Change in Control involving an acquiring entity or successor to the Company or the Bank, obtain an enforceable assumption in writing by (i) the entity which is the acquiring entity or successor to the Company or the Bank, as the case may be, in the Change in Control and, (ii) if the acquiring entity or successor to the Company or the Bank, as the case may be, is a bank, the holding company parent of the acquiring entity or successor, of this Agreement and the obligations of |
17. | Regulatory Matters. |
18. | Section 409A Compliance. |
a. | This Agreement shall be amended to the extent necessary to comply with Section 409A of the Code and regulations promulgated thereunder. Prior to such amendment, and notwithstanding anything contained herein to the contrary, this Agreement shall be construed in a manner consistent with Section 409A of the Code and the parties shall take such actions as are required to comply in good faith with the provisions of Section 409A of the Code such that payments shall not be made to the Executive at such time if such payments shall subject the Executive to the penalty tax under Section 409A of the Code, but rather such payments shall be made by the Bank to the Executive at the earliest time permissible thereafter without the Executive having liability for such penalty tax under Section 409A of the Code. |
b. | If and to the extent termination payments under this Agreement constitute deferred compensation within the meaning of Section 409A of the Code and regulations promulgated thereunder, and if the payment under this Section 9 does not qualify as a short-term deferral under Section 409A of the Code and Treas. Reg. §1.409A-1(b)(4) (or any similar or successor provisions), and the Executive is a Specified Employee within the meaning of Section 409A of the Code and regulations promulgated thereunder, then the payment of such termination payments that constitute deferred compensation under Section 409A of the Code shall comply with Section 409A(a)(2)(B)(i) of the Code and the regulations thereunder, which generally provide that distributions of deferred compensation (within the meaning of Section 409A of the Code) to a Specified Employee that are payable on account of Termination of Employment may not commence prior to the six (6) month anniversary of the Executive’s Termination of Employment (or, if earlier, the date of the Executive’s death). Amounts that would otherwise be distributed to the Executive during such six (6) month period but for the preceding sentence shall be accumulated and paid to the Executive on the 185th day following the date of the Executive’s Termination of Employment. |
d. | To the extent that any reimbursements or in-kind payments are subject to Section 409A of the Code, then such expenses (other than medical expenses) must be incurred before the last day of the second taxable year following the taxable year in which the termination occurred, provided that any reimbursement for such expenses shall be paid before the Executive’s third taxable year following the taxable year in which the termination occurred. For medical expenses, to the extent the Agreement entitles the Executive to reimbursement by the Employer of payments of medical expenses incurred and paid by the Executive but not reimbursed by a person other than the Employer and allowable as a deduction under Section 213 of the Code (disregarding |
1. | Definitions. |
a. | Cause. For purposes of this Agreement, “Cause”, with respect to the termination by the Employer of the Executive’s employment shall mean (i) the willful and continued failure by the Executive to perform his or her duties for the Employer under this Agreement after at least one warning in writing from the President and Chief Executive Officer of the Employer identifying specifically any such failure and providing at least a ten day period for an opportunity to cure such failure detailed in such warning; (ii) if the Executive shall have engaged in conduct involving fraud, deceit, personal dishonesty, breach of fiduciary duty or illegal conduct in his or her business and/or personal matters; (iii) willful misconduct of any type by the Executive, including, but not limited to, the disclosure or improper use of confidential information under Section 11 of this Agreement, which causes material injury to the Company or any of its subsidiaries or affiliates, as specified in a written notice to the Executive from President and Chief Executive Officer of the Employer; (iv) the Executive’s conviction of a crime (other than a traffic violation); (v) if the Executive shall have become subject to continuing intemperance in the use of alcohol or drugs which has adversely affected, or may adversely affect, the business or reputation of the Company or the Bank as determined by the Board or the President and Chief Executive Officer of the Employer; (vi) if the Executive shall have violated any banking law or regulation, memorandum of understanding, cease and desist order, or other agreement with any banking agency having jurisdiction over the Company or the Bank which, in the judgment of the Board or the President and Chief Executive Officer of the Employer, has adversely affected, or may adversely affect, the business or reputation of the Company or the Bank; (vii) if the Executive shall have filed, or had filed against him or her, any petition under the federal bankruptcy laws or any state insolvency laws; or (viii) if any banking authority having supervisory jurisdiction over the Company or the Bank initiates any proceedings for removal of the Executive. No act or failure to act on the part of the Executive shall be considered to have been willful for purposes of clause (i) or (iii) of this Section 1(a) unless done, or omitted to be done, by the Executive not in good faith and without reasonable belief that the action or omission was in the best interest of the Company or any of its subsidiaries or affiliates. |
b. | Change in Control. “Change in Control” shall mean the occurrence of any of the following events: |
c. | Contract Period. “Contract Period” shall mean the period commencing on the business day immediately preceding a Change in Control and ending on the earlier of (i) the second anniversary of the date of the Change in Control, or (ii) the death of the Executive. |
d. | Employer. “Employer” shall mean the Company and/or the Bank, whichever entity that shall employ the Executive from time to time, and any successor entity thereto. |
e. | Good Reason. When used with reference to a voluntary termination by the Executive of his or her employment with the Employer, “Good Reason” shall mean any of the following, if taken without the Executive’s express written consent: |
2. | Employment. The Employer hereby agrees to employ the Executive, and the Executive hereby accepts such employment, during the Contract Period upon the terms and conditions set forth herein. The Company and the Bank may, in the exercise of their sole discretion, transfer the Executive’s employment relationship from the Bank to the Company, or from the Company to the Bank, in which case the transferee employer shall be the Employer for all purposes of this Agreement. The transfer of the Executive’s employment relationship between the Bank and the Company shall not be deemed to be either an actual or constructive termination of the Executive or “Good Reason” for any purpose of this Agreement, and the Executive’s employment shall be deemed to have continued without interruption for all purposes of this Agreement. |
3. | Job Position. During the Contract Period, the Executive shall be employed in the Officer Position with the Company and the Bank, or such other corporate or divisional profit center as shall then be the principal successor to the business, assets and properties of the Bank, with a comparable position title and comparable professional job duties, responsibilities and required experience and skill level as were in effect before the Change in Control. The Executive shall devote his or her full time professional effort and attention to the business of the Employer, and shall not, during the Contract Period, be engaged in any other business activity without the written consent of the Employer. |
4. | Cash Compensation. The Employer shall pay to the Executive compensation for his or her services during the Contract Period as follows: |
a. | Base Compensation. The base compensation shall be equal to not less than such annual compensation, including both salary and bonus, as was paid to or accrued by, or for the benefit of, the Executive in the twelve (12) months immediately prior to the Change in Control. The annual salary portion of base compensation shall be payable in installments in accordance with the Employer’s usual payroll method. The bonus portion, if any, shall be payable at the time and in the manner as to which the Employer paid such bonuses prior to the Change in Control. Any increase in the Executive’s annual compensation pursuant to paragraph 4(b) below, or otherwise, shall automatically and permanently increase the base compensation. |
b. | Annual Increase. During the Contract Period, the Board of Directors of the Employer shall review not less than annually, the Executive’s compensation and shall award him or her additional compensation to reflect the Executive’s performance and the performance of the Employer and the Company corporate group, and competitive compensation levels, all as determined in the discretion of the Board of Directors of the Employer. |
5. | Expenses and Fringe Benefits. During the Contract Period, the Executive shall be entitled to reimbursement for all business expenses incurred by him or her with respect to the business of the Employer in the same manner and to the same extent as such expenses were previously reimbursed to him or her immediately prior to the Change in Control. If prior to the Change in Control, the Executive was entitled to the use of an automobile, he or she shall continue to be entitled to the same use of an automobile at least comparable to the automobile provided to him or her prior to the Change in Control, and he or she shall be entitled to vacation leave and sick days, in accordance with the practices and procedures of the Employer, as such existed immediately prior to the Change in Control. During the Contract Period, the Executive also shall be entitled to hospital, health, medical and life insurance, and any other material benefits enjoyed, from time to time, by executive officers of the Employer, all upon terms as favorable as those enjoyed by other executive officers of the Employer. Notwithstanding anything in this section to the contrary, if the Employer adopts any change in the expenses allowed to, or fringe benefits provided for, executive officers of the Employer, and such policy is uniformly applied to all executive officers of the Employer, and any successor or acquirer of the Employer, if any, including the chief executive officer of such entities, then no such change in policy shall be deemed to be a violation of this provision. |
6. | Termination for Cause. At all times, including both before and during the Contract Period, the Employer shall have the right to terminate the Executive for Cause, upon written notice to him or her of the termination, which notice shall specify the reasons for the termination. In the event of termination for Cause, the Executive shall not be entitled to any further benefits under this Agreement. |
7. | Disability. During the Contract Period, if the Executive becomes permanently and totally disabled within the meaning of the Social Security Act, the Employer may terminate the employment of the Executive. In which event, the Executive shall not be entitled to any further benefits under this Agreement other than payments under any disability policy which the Employer may maintain for the benefit of its senior officers generally. |
8. | Death Benefits. Upon the Executive’s death during the Contract Period, the Executive shall be entitled to the benefits of any life insurance policy or supplemental executive retirement plan paid for, or maintained by, the Employer, but his estate shall not be entitled to any further benefits under this Agreement. |
9. | Termination without Cause or Resignation for Good Reason. |
a. | The Employer may terminate the Executive without Cause during the Contract Period by giving the Executive not less than four weeks’ prior written notice to the Executive. During the Contract Period, the Executive may resign within 90 days following the initial occurrence of a condition constituting a Good Reason upon giving not less than four weeks’ prior written notice to the Employer specifying the condition constituting Good Reason. The date of termination of employment for Good Reason shall be no later than twenty-four months following commencement of the Contract Period. If the Employer terminates the Executive’s employment during the Contract Period without Cause or if the Executive resigns for Good Reason, the Employer shall, upon such termination of employment, pay the Executive a lump sum amount equal to 150% times the average of the annualized compensation, comprised of annualized salary and cash incentive or bonus compensation, paid or accrued to the Executive during the thirty-six month period (or such lesser number of months of actual employment) immediately prior to the Change in Control (the “Lump Sum Payment”). Notwithstanding the foregoing, any notice of resignation for Good Reason during the Contract Period furnished by the Executive to the Employer shall not be effective prior to the date that is three months following the date of the Change in Control, and the Executive shall continue to work through such three month period, unless the Employer shall agree in writing to an earlier effective date of such resignation. |
b. | For a period of eighteen (18) months following the effective date of such termination of employment following a Change in Control, whether resulting from without Cause termination initiated by the Employer or for Good Reason initiated by the Executive, the Employer shall continue to provide the Executive with and pay the applicable premiums for medical and hospital insurance, disability insurance and life insurance benefits, as were provided and paid for at the time of the termination of his employment with the Employer; provided that, if at any time during such eighteen month period, the Executive becomes employed by another employer which provides one or more such benefits, the Employer shall, immediately and from the date when such benefits are made available to the Executive by the successor employer, be relieved of its obligation to provide such benefits to the extent such benefits are duplicative of what is provided to the Executive by the Executive’s new employer. If the Employer cannot provide the benefits set forth in this Section 9(b) because Executive is no longer an employee and applicable rules and regulations prohibit the continuation of such benefits in the manner contemplated, or it would subject the Employer to penalties, then the Employer shall pay Executive a cash lump sum payment reasonably estimated to be equal to the value of such benefits or the value of the remaining benefits at the time of such determination. The cash payment shall be made in a lump sum within thirty (30) days after the later of Executive’s date of termination or the effective date of the rules or regulations prohibiting the benefits or subjecting the Bank to penalties. |
c. | The Executive shall not have a duty to mitigate the damages suffered by him or her in connection with the termination by the Employer of his employment without Cause or a resignation for Good Reason during the Contract Period. If the Employer fails to pay the Executive the Lump Sum Payment or to provide him or her with the benefits due under this Section 9, the Executive, after giving ten (10) days’ written notice to the Employer identifying the Employer’s failure, shall be entitled to recover from the Employer all of his reasonable legal fees and expenses incurred in connection with his or her enforcement against the Employer of the terms of this Agreement. The Employer agrees to pay such legal fees and expenses to the Executive on demand. The Executive shall be denied payment of his or her legal fees and expenses only if a court finds that the Executive sought payment of such fees without reasonable cause and in bad faith. |
10. | Resignation without Good Reason. The Executive shall be entitled to resign from the employment of the Employer at any time during the Contract Period without Good Reason, but upon such resignation, the Executive shall not be entitled to any additional compensation for the time after which he or she ceases to be employed by the Employer, and shall not be entitled to any of the other benefits provided for herein, except as may otherwise be provided by the terms of such other plans or arrangements of the Employer or in accordance with applicable law. No such resignation shall be effective unless in writing with four weeks’ notice thereof. |
11. | Restrictions and Limitations on Executive Conduct. |
a. | Non-Disclosure of Confidential Information. Except in the course of his or her employment with the Employer and in pursuit of the business of the Company, the Bank or any of their subsidiaries or affiliates, the Executive shall not, at any time during or following the Contract Period, disclose or use for any purpose any confidential information or proprietary data of the Company, the Bank or any of their respective subsidiaries or affiliates. The Executive agrees that, among other things, all information concerning the identity of, and the Company’s and the Bank’s relations with, their respective customers is confidential and proprietary information. |
b. | Covenant Not to Compete. The Executive agrees that for a period of twelve months following termination of employment in conjunction with or after a Change in Control, the Executive shall not become employed or retained by, directly or indirectly, any FDIC insured depository institution whereby the Executive shall have a new work location that is within 15 miles of any branch or office of the Bank in existence as of the date of the Change in Control. The Executive acknowledges that the terms and conditions of this restrictive covenant are reasonable and necessary to protect the Company, its subsidiaries, its affiliates, and any successors in interest, and that the Employer’s tender of compensation under this Agreement is fair, adequate and valid consideration in exchange for his or her promises and restrictions under this subparagraph of this Agreement. The Executive further acknowledges that his knowledge, skills and abilities are sufficient to permit him or her to earn a satisfactory livelihood without violating the provisions of this subparagraph. |
c. | Non-Solicitation of Business. The Executive agrees that for a period of one year following termination of employment in conjunction with or after a Change in Control, the Executive shall not contact (with a view toward selling any product or service competitive with any product or service sold or proposed to be sold by the Company, the Bank or any successors thereto (“Companies”)) any person, firm, association or corporation (a) to which the Companies sells any product or service, (b) which the Executive solicited, contacted or otherwise dealt with on behalf of the Companies, or (c) which the Executive is otherwise aware is a client of the Companies. During such one-year period, the Executive will not directly or indirectly make any such contact, either for his own benefit or for the benefit of any other person, firm, association, or corporation. |
d. | Non-Solicitation of Employees. The Executive agrees that for a period of one year following termination of employment in conjunction with or after a Change in Control, the Executive shall not contact, on his or her own behalf or on behalf of others, employ, solicit, or induce, or attempt to employ, solicit or induce, any employee of the Companies for purposes of employment or other business relationship with any other business entity, nor will the Executive directly or indirectly, on his behalf or for others, seek to influence any Companies’ employee to leave the employ of the Companies. |
e. | Specific Performance and Severability. The Executive agrees that the Company and the Bank do not have an adequate remedy at law for the breach of this Section 11 and agrees that he or she shall be subject to injunctive relief and equitable remedies as a result of any breach of this section. The provisions of this Agreement shall be deemed severable, and the invalidity or unenforceability of any provision of this Agreement shall not affect the force and effect of the remaining provisions. |
f. | Survival. This Section 11 shall survive the termination or resignation of the Executive’s employment during the Contract Period for any reason and the expiration of this Agreement. |
12. | Term and Effect Prior to Change in Control. |
a. | Term. Except as otherwise provided for herein, this Agreement shall commence on the Effective Date hereof and shall remain in effect for a period of two (2) years thereafter (the “Term”) or until the end of the Contract Period, whichever is later. The Term shall be automatically extended for an additional one (1) year period on each annual anniversary date of the Effective Date, unless the Board of Directors of the Employer then in office votes not to so extend such Term prior to each such annual anniversary date. The Executive shall be promptly notified of the passage of such a resolution on non-extension of such Term. In the event that the Contract Period shall not commence prior to the expiration of the Term of this Agreement, then this Agreement shall terminate upon the expiration of the Term, unless such Term shall be extended prior to its expiration. |
b. | No Effect Prior to Change in Control. This Agreement shall not, in any respect, affect any rights of the Employer or the Executive prior to a Change in Control, nor shall this Agreement affect or limit any rights of the Executive granted in accordance with any other agreement, plan or arrangement. The rights, duties and benefits provided hereunder shall only become effective upon the occurrence of a Change in Control, as defined in this Agreement. If the employment of the Executive is terminated by the Employer for any reason in good faith prior to a Change in Control, this Agreement shall thereafter be of no further force and effect. |
13. | Limitations under Section 280G. Notwithstanding the forgoing, all sums payable hereunder shall be reduced in such manner and to such extent so that no such payments made hereunder when aggregated with all other payments to be made to the Executive by the Company and the Bank shall be deemed an "excess parachute payment" in accordance with Section 280G of the Code, and thereby subjecting the Executive to the excise tax provided at Section 4999(a) of the Code. |
14. | Release in Favor of the Company Corporate Group. Notwithstanding anything herein to the contrary, such payment due in accordance with Section 9 herein shall be made to the Executive by the Employer on the date which is sixty (60) days following the date of Termination of Employment (the “Payment Date”); provided that the Executive shall have executed and delivered to the Employer within fifty (50) days following the date of Termination of Employment a release in favor of the Company, the Bank, their respective affiliates and subsidiaries, and their respective employees, officers, directors and agents, which release shall be substantially in form and content as the form of General Release set forth at Exhibit A hereto (with any changes as are reasonably requested by the Employer to reflect changes in law or practice) and all permissible revocation periods have lapsed with respect to such release without being exercised by the Executive prior to such Payment Date. If the release requirements at this Section 14 have not been satisfied by the Executive prior to such Payment Date, including the lapse of all such revocation periods prior to such Payment Date, then the obligations of the Employer to make such payment to the Executive in accordance with Section 9 herein shall be nullified at such time. |
15. | Severance Compensation and Benefits not in Derogation of Other Benefits. Subject only to those particular terms of this Agreement to the contrary, the payment or obligation to pay any monies, or the granting of any benefits, rights or privileges to the Executive as provided in this Agreement shall not be in lieu or derogation of the rights and privileges that the Executive now has or will have under any plans or programs of the Employer. |
16. | Miscellaneous. This Agreement shall be the joint and several obligation of the Company, the Bank and any acquiring entity(ies) which assumes the obligations of the Company and the Bank under this Agreement. The terms of this Agreement shall be governed by, and interpreted and construed in accordance with the provisions of, the laws of New Jersey and, to the extent applicable, Federal law. Except as specifically set forth in this Agreement, this Agreement supersedes all prior agreements and understandings with respect to the matters covered hereby. The amendment or termination of this Agreement may be made only in a writing executed by the Company, the Bank and the Executive, and no amendment or termination of this Agreement shall be effective unless and until made in such a writing. This Agreement shall be binding to the extent of its applicability upon any successor (whether direct or indirect, by purchase, merge, consolidation, liquidation or otherwise) to all or substantially all of the assets of the Company or the Bank. This Agreement is personal to the Executive, and the Executive may not assign any of his rights or duties hereunder, but this Agreement shall be enforceable by the Executive’s legal representatives, executors or administrators. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, and it shall not be necessary in making proof of this Agreement to produce or account for more than one such counterpart. The Company or the Bank, as the case may be, shall, as part of any Change in Control involving an acquiring entity or successor to the Company or the Bank, obtain an enforceable assumption in writing by (i) the entity which is the acquiring entity or successor to the Company or the Bank, as the case may be, in the Change in Control and, (ii) if the acquiring entity or successor to the Company or the Bank, as the case may be, is a bank, the holding company parent of the acquiring entity or successor, of this Agreement and the obligations of the Company or the Bank, as the case may be, under this Agreement, and shall provide a copy of such assumption to the Executive prior to any Change in Control. |
17. | Regulatory Matters. |
18. | Section 409A Compliance. |
a. | This Agreement shall be amended to the extent necessary to comply with Section 409A of the Code and regulations promulgated thereunder. Prior to such amendment, and notwithstanding anything contained herein to the contrary, this Agreement shall be construed in a manner consistent with Section 409A of the Code and the parties shall take such actions as are required to comply in good faith with the provisions of Section 409A of the Code such that payments shall not be made to the Executive at such time if such payments shall subject the Executive to the penalty tax under Section 409A of the Code, but rather such payments shall be made by the Bank to the Executive at the earliest time permissible thereafter without the Executive having liability for such penalty tax under Section 409A of the Code. |
b. | If and to the extent termination payments under this Agreement constitute deferred compensation within the meaning of Section 409A of the Code and regulations promulgated thereunder, and if the payment under this Section 9 does not qualify as a short-term deferral under Section 409A of the Code and Treas. Reg. §1.409A-1(b)(4) (or any similar or successor provisions), and the Executive is a Specified Employee within the meaning of Section 409A of the Code and regulations promulgated thereunder, then the payment of such termination payments that constitute deferred compensation under Section 409A of the Code shall comply with Section 409A(a)(2)(B)(i) of the Code and the regulations thereunder, which generally provide that distributions of deferred compensation (within the meaning of Section 409A of the Code) to a Specified Employee that are payable on account of Termination of Employment may not commence prior to the six (6) month anniversary of the Executive’s Termination of Employment (or, if earlier, the date of the Executive’s death). Amounts that would otherwise be distributed to the Executive during such six (6) month period but for the preceding sentence shall be accumulated and paid to the Executive on the 185th day following the date of the Executive’s Termination of Employment. |
d. | To the extent that any reimbursements or in-kind payments are subject to Section 409A of the Code, then such expenses (other than medical expenses) must be incurred before the last day of the second taxable year following the taxable year in which the termination occurred, provided that any reimbursement for such expenses shall be paid before the Executive’s third taxable year following the taxable year in which the termination occurred. For medical expenses, to the extent the Agreement entitles the Executive to reimbursement by the Employer of payments of medical expenses incurred and paid by the Executive but not reimbursed by a person other than the Employer and allowable as a deduction under Section 213 of the Code (disregarding the requirement of Section 213(a) of the Code that the deduction is available only to the extent that such expenses exceed 7.5 percent of adjusted gross income), then the reimbursement applies during the period of time during which the Executive would be entitled (or would, but for the Agreement, be entitled) to continuation coverage under a group health plan of the Bank or the Company under Section 4980B of the Code (COBRA) if the Executive elected such coverage and paid the applicable premiums. |
1. | Definitions. |
a. | Cause. For purposes of this Agreement, “Cause”, with respect to the termination by the Employer of the Executive’s employment shall mean (i) the willful and continued failure by the Executive to perform his or her duties for the Employer under this Agreement after at least one warning in writing from the President and Chief Executive Officer of the Employer identifying specifically any such failure and providing at least a ten day period for an opportunity to cure such failure detailed in such warning; (ii) if the Executive shall have engaged in conduct involving fraud, deceit, personal dishonesty, breach of fiduciary duty or illegal conduct in his or her business and/or personal matters; (iii) willful misconduct of any type by the Executive, including, but not limited to, the disclosure or improper use of confidential information under Section 11 of this Agreement, which causes material injury to the Company or any of its subsidiaries or affiliates, as specified in a written notice to the Executive from President and Chief Executive Officer of the Employer; (iv) the Executive’s conviction of a crime (other than a traffic violation); (v) if the Executive shall have become subject to continuing intemperance in the use of alcohol or drugs which has adversely affected, or may adversely affect, the business or reputation of the Company or the Bank as determined by the Board or the President and Chief Executive Officer of the Employer; (vi) if the Executive shall have violated any banking law or regulation, memorandum of understanding, cease and desist order, or other agreement with any banking agency having jurisdiction over the Company or the Bank which, in the judgment of the Board or the President and Chief Executive Officer of the Employer, has adversely affected, or may adversely affect, the business or reputation of the Company or the Bank; (vii) if the Executive shall have filed, or had filed against him or her, any petition under the federal bankruptcy laws or any state insolvency laws; or (viii) if any banking authority having supervisory jurisdiction over the Company or the Bank initiates any proceedings for removal of the Executive. No act or failure to act on the part of the Executive shall be considered to have been willful for purposes of clause (i) or (iii) of this Section 1(a) unless done, or omitted to be done, by the Executive not in good faith and without reasonable belief that the action or omission was in the best interest of the Company or any of its subsidiaries or affiliates. |
b. | Change in Control. “Change in Control” shall mean the occurrence of any of the following events: |
c. | Contract Period. “Contract Period” shall mean the period commencing on the business day immediately preceding a Change in Control and ending on the earlier of (i) the second anniversary of the date of the Change in Control, or (ii) the death of the Executive. |
d. | Employer. “Employer” shall mean the Company and/or the Bank, whichever entity that shall employ the Executive from time to time, and any successor entity thereto. |
e. | Good Reason. When used with reference to a voluntary termination by the Executive of his or her employment with the Employer, “Good Reason” shall mean any of the following, if taken without the Executive’s express written consent: |
2. | Employment. The Employer hereby agrees to employ the Executive, and the Executive hereby accepts such employment, during the Contract Period upon the terms and conditions set forth herein. The Company and the Bank may, in the exercise of their sole discretion, transfer the Executive’s employment relationship from the Bank to the Company, or from the Company to the Bank, in which case the transferee employer shall be the Employer for all purposes of this Agreement. The transfer of the Executive’s employment relationship between the Bank and the Company shall not be deemed to be either an actual or constructive termination of the Executive or “Good Reason” for any purpose of this Agreement, and the Executive’s employment shall be deemed to have continued without interruption for all purposes of this Agreement. |
3. | Job Position. During the Contract Period, the Executive shall be employed in the Officer Position with the Company and the Bank, or such other corporate or divisional profit center as shall then be the principal successor to the business, assets and properties of the Bank, with a comparable position title and comparable professional job duties, responsibilities and required experience and skill level as were in effect before the Change in Control. The Executive shall devote his or her full time professional effort and attention to the business of the Employer, and shall not, during the Contract Period, be engaged in any other business activity without the written consent of the Employer. |
4. | Cash Compensation. The Employer shall pay to the Executive compensation for his or her services during the Contract Period as follows: |
a. | Base Compensation. The base compensation shall be equal to not less than such annual compensation, including both salary and bonus, as was paid to or accrued by, or for the benefit of, the Executive in the twelve (12) months immediately prior to the Change in Control. The annual salary portion of base compensation shall be payable in installments in accordance with the Employer’s usual payroll method. The bonus portion, if any, shall be payable at the time and in the manner as to which the Employer paid such bonuses prior to the Change in Control. Any increase in the Executive’s annual compensation pursuant to paragraph 4(b) below, or otherwise, shall automatically and permanently increase the base compensation. |
b. | Annual Increase. During the Contract Period, the Board of Directors of the Employer shall review not less than annually, the Executive’s compensation and shall award him or her additional compensation to reflect the Executive’s performance and the performance of the Employer and the Company corporate group, and competitive compensation levels, all as determined in the discretion of the Board of Directors of the Employer. |
5. | Expenses and Fringe Benefits. During the Contract Period, the Executive shall be entitled to reimbursement for all business expenses incurred by him or her with respect to the business of the Employer in the same manner and to the same extent as such expenses were previously reimbursed to him or her immediately prior to the Change in Control. If prior to the Change in Control, the Executive was entitled to the use of an automobile, he or she shall continue to be entitled to the same use of an automobile at least comparable to the automobile provided to him or her prior to the Change in Control, and he or she shall be entitled to vacation leave and sick days, in accordance with the practices and procedures of the Employer, as such existed immediately prior to the Change in Control. During the Contract Period, the Executive also shall be entitled to hospital, health, medical and life insurance, and any other material benefits enjoyed, from time to time, by executive officers of the Employer, all upon terms as favorable as those enjoyed by other executive officers of the Employer. Notwithstanding anything in this section to the contrary, if the Employer adopts any change in the expenses allowed to, or fringe benefits provided for, executive officers of the Employer, and such policy is uniformly applied to all executive officers of the Employer, and any successor or acquirer of the Employer, if any, including the chief executive officer of such entities, then no such change in policy shall be deemed to be a violation of this provision. |
6. | Termination for Cause. At all times, including both before and during the Contract Period, the Employer shall have the right to terminate the Executive for Cause, upon written notice to him or her of the termination, which notice shall specify the reasons for the termination. In the event of termination for Cause, the Executive shall not be entitled to any further benefits under this Agreement. |
7. | Disability. During the Contract Period, if the Executive becomes permanently and totally disabled within the meaning of the Social Security Act, the Employer may terminate the employment of the Executive. In which event, the Executive shall not be entitled to any further benefits under this Agreement other than payments under any disability policy which the Employer may maintain for the benefit of its senior officers generally. |
8. | Death Benefits. Upon the Executive’s death during the Contract Period, the Executive shall be entitled to the benefits of any life insurance policy or supplemental executive retirement plan paid for, or maintained by, the Employer, but his estate shall not be entitled to any further benefits under this Agreement. |
9. | Termination without Cause or Resignation for Good Reason. |
a. | The Employer may terminate the Executive without Cause during the Contract Period by giving the Executive not less than four weeks’ prior written notice to the Executive. During the Contract Period, the Executive may resign within 90 days following the initial occurrence of a condition constituting a Good Reason upon giving not less than four weeks’ prior written notice to the Employer specifying the condition constituting Good Reason. The date of termination of employment for Good Reason shall be no later than twenty-four months following commencement of the Contract Period. If the Employer terminates the Executive’s employment during the Contract Period without Cause or if the Executive resigns for Good Reason, the Employer shall, upon such termination of employment, pay the Executive a lump sum amount equal to 250% times the average of the annualized compensation, comprised of annualized salary and cash incentive or bonus compensation, paid or accrued to the Executive during the thirty-six month period (or such lesser number of months of actual employment) immediately prior to the Change in Control (the “Lump Sum Payment”). Notwithstanding the foregoing, any notice of resignation for Good Reason during the Contract Period furnished by the Executive to the Employer shall not be effective prior to the date that is three months following the date of the Change in Control, and the Executive shall continue to work through such three month period, unless the Employer shall agree in writing to an earlier effective date of such resignation. |
b. | For a period of eighteen (18) months following the effective date of such termination of employment following a Change in Control, whether resulting from without Cause termination initiated by the Employer or for Good Reason initiated by the Executive, the Employer shall continue to provide the Executive with and pay the applicable premiums for medical and hospital insurance, disability insurance and life insurance benefits, as were provided and paid for at the time of the termination of his employment with the Employer; provided that, if at any time during such eighteen month period, the Executive becomes employed by another employer which provides one or more such benefits, the Employer shall, immediately and from the date when such benefits are made available to the Executive by the successor employer, be relieved of its obligation to provide such benefits to the extent such benefits are duplicative of what is provided to the Executive by the Executive’s new employer. If the Employer cannot provide the benefits set forth in this Section 9(b) because Executive is no longer an employee and applicable rules and regulations prohibit the continuation of such benefits in the manner contemplated, or it would subject the Employer to penalties, then the Employer shall pay Executive a cash lump sum payment reasonably estimated to be equal to the value of such benefits or the value of the remaining benefits at the time of such determination. The cash payment shall be made in a lump sum within thirty (30) days after the later of Executive’s date of termination or the effective date of the rules or regulations prohibiting the benefits or subjecting the Bank to penalties. |
c. | The Executive shall not have a duty to mitigate the damages suffered by him or her in connection with the termination by the Employer of his employment without Cause or a resignation for Good Reason during the Contract Period. If the Employer fails to pay the Executive the Lump Sum Payment or to provide him or her with the benefits due under this Section 9, the Executive, after giving ten (10) days’ written notice to the Employer identifying the Employer’s failure, shall be entitled to recover from the Employer all of his reasonable legal fees and expenses incurred in connection with his or her enforcement against the Employer of the terms of this Agreement. The Employer agrees to pay such legal fees and expenses to the Executive on demand. The Executive shall be denied payment of his or her legal fees and expenses only if a court finds that the Executive sought payment of such fees without reasonable cause and in bad faith. |
10. | Resignation without Good Reason. The Executive shall be entitled to resign from the employment of the Employer at any time during the Contract Period without Good Reason, but upon such resignation, the Executive shall not be entitled to any additional compensation for the time after which he or she ceases to be employed by the Employer, and shall not be entitled to any of the other benefits provided for herein, except as may otherwise be provided by the terms of such other plans or arrangements of the Employer or in accordance with applicable law. No such resignation shall be effective unless in writing with four weeks’ notice thereof. |
11. | Restrictions and Limitations on Executive Conduct. |
a. | Non-Disclosure of Confidential Information. Except in the course of his or her employment with the Employer and in pursuit of the business of the Company, the Bank or any of their subsidiaries or affiliates, the Executive shall not, at any time during or following the Contract Period, disclose or use for any purpose any confidential information or proprietary data of the Company, the Bank or any of their respective subsidiaries or affiliates. The Executive agrees that, among other things, all information concerning the identity of, and the Company’s and the Bank’s relations with, their respective customers is confidential and proprietary information. |
b. | Covenant Not to Compete. The Executive agrees that for a period of twelve months following termination of employment in conjunction with or after a Change in Control, the Executive shall not become employed or retained by, directly or indirectly, any FDIC insured depository institution whereby the Executive shall have a new work location that is within 15 miles of any branch or office of the Bank in existence as of the date of the Change in Control. The Executive acknowledges that the terms and conditions of this restrictive covenant are reasonable and necessary to protect the Company, its subsidiaries, its affiliates, and any successors in interest, and that the Employer’s tender of compensation under this Agreement is fair, adequate and valid consideration in exchange for his or her promises and restrictions under this subparagraph of this Agreement. The Executive further acknowledges that his knowledge, skills and abilities are sufficient to permit him or her to earn a satisfactory livelihood without violating the provisions of this subparagraph. |
c. | Non-Solicitation of Business. The Executive agrees that for a period of one year following termination of employment in conjunction with or after a Change in Control, the Executive shall not contact (with a view toward selling any product or service competitive with any product or service sold or proposed to be sold by the Company, the Bank or any successors thereto (“Companies”)) any person, firm, association or corporation (a) to which the Companies sells any product or service, (b) which the Executive solicited, contacted or otherwise dealt with on behalf of the Companies, or (c) which the Executive is otherwise aware is a client of the Companies. During such one-year period, the Executive will not directly or indirectly make any such contact, either for his own benefit or for the benefit of any other person, firm, association, or corporation. |
d. | Non-Solicitation of Employees. The Executive agrees that for a period of one year following termination of employment in conjunction with or after a Change in Control, the Executive shall not contact, on his or her own behalf or on behalf of others, employ, solicit, or induce, or attempt to employ, solicit or induce, any employee of the Companies for purposes of employment or other business relationship with any other business entity, nor will the Executive directly or indirectly, on his behalf or for others, seek to influence any Companies’ employee to leave the employ of the Companies. |
e. | Specific Performance and Severability. The Executive agrees that the Company and the Bank do not have an adequate remedy at law for the breach of this Section 11 and agrees that he or she shall be subject to injunctive relief and equitable remedies as a result of any breach of this section. The provisions of this Agreement shall be deemed severable, and the invalidity or unenforceability of any provision of this Agreement shall not affect the force and effect of the remaining provisions. |
f. | Survival. This Section 11 shall survive the termination or resignation of the Executive’s employment during the Contract Period for any reason and the expiration of this Agreement. |
12. | Term and Effect Prior to Change in Control. |
a. | Term. Except as otherwise provided for herein, this Agreement shall commence on the Effective Date hereof and shall remain in effect for a period of two (2) years thereafter (the “Term”) or until the end of the Contract Period, whichever is later. The Term shall be automatically extended for an additional one (1) year period on each annual anniversary date of the Effective Date, unless the Board of Directors of the Employer then in office votes not to so extend such Term prior to each such annual anniversary date. The Executive shall be promptly notified of the passage of such a resolution on non-extension of such Term. In the event that the Contract Period shall not commence prior to the expiration of the Term of this Agreement, then this Agreement shall terminate upon the expiration of the Term, unless such Term shall be extended prior to its expiration. |
b. | No Effect Prior to Change in Control. This Agreement shall not, in any respect, affect any rights of the Employer or the Executive prior to a Change in Control, nor shall this Agreement affect or limit any rights of the Executive granted in accordance with any other agreement, plan or arrangement. The rights, duties and benefits provided hereunder shall only become effective upon the occurrence of a Change in Control, as defined in this Agreement. If the employment of the Executive is terminated by the Employer for any reason in good faith prior to a Change in Control, this Agreement shall thereafter be of no further force and effect. |
13. | Limitations under Section 280G. Notwithstanding the forgoing, all sums payable hereunder shall be reduced in such manner and to such extent so that no such payments made hereunder when aggregated with all other payments to be made to the Executive by the Company and the Bank shall be deemed an "excess parachute payment" in accordance with Section 280G of the Code, and thereby subjecting the Executive to the excise tax provided at Section 4999(a) of the Code. |
14. | Release in Favor of the Company Corporate Group. Notwithstanding anything herein to the contrary, such payment due in accordance with Section 9 herein shall be made to the Executive by the Employer on the date which is sixty (60) days following the date of Termination of Employment (the “Payment Date”); provided that the Executive shall have executed and delivered to the Employer within fifty (50) days following the date of Termination of Employment a release in favor of the Company, the Bank, their respective affiliates and subsidiaries, and their respective employees, officers, directors and agents, which release shall be substantially in form and content as the form of General Release set forth at Exhibit A hereto (with any changes as are reasonably requested by the Employer to reflect changes in law or practice) and all permissible revocation periods have lapsed with respect to such release without being exercised by the Executive prior to such Payment Date. If the release requirements at this Section 14 have not been satisfied by the Executive prior to such Payment Date, including the lapse of all such revocation periods prior to such Payment Date, then the obligations of the Employer to make such payment to the Executive in accordance with Section 9 herein shall be nullified at such time. |
15. | Severance Compensation and Benefits not in Derogation of Other Benefits. Subject only to those particular terms of this Agreement to the contrary, the payment or obligation to pay any monies, or the granting of any benefits, rights or privileges to the Executive as provided in this Agreement shall not be in lieu or derogation of the rights and privileges that the Executive now has or will have under any plans or programs of the Employer. |
16. | Miscellaneous. This Agreement shall be the joint and several obligation of the Company, the Bank and any acquiring entity(ies) which assumes the obligations of the Company and the Bank under this Agreement. The terms of this Agreement shall be governed by, and interpreted and construed in accordance with the provisions of, the laws of New Jersey and, to the extent applicable, Federal law. Except as specifically set forth in this Agreement, this Agreement supersedes all prior agreements and understandings with respect to the matters covered hereby. The amendment or termination of this Agreement may be made only in a writing executed by the Company, the Bank and the Executive, and no amendment or termination of this Agreement shall be effective unless and until made in such a writing. This Agreement shall be binding to the extent of its applicability upon any successor (whether direct or indirect, by purchase, merge, consolidation, liquidation or otherwise) to all or substantially all of the assets of the Company or the Bank. This Agreement is personal to the Executive, and the Executive may not assign any of his rights or duties hereunder, but this Agreement shall be enforceable by the Executive’s legal representatives, executors or administrators. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, and it shall not be necessary in making proof of this Agreement to produce or account for more than one such counterpart. The Company or the Bank, as the case may be, shall, as part of any Change in Control involving an acquiring entity or successor to the Company or the Bank, obtain an enforceable assumption in writing by (i) the entity which is the acquiring entity or successor to the Company or the Bank, as the case may be, in the Change in Control and, (ii) if the acquiring entity or successor to the Company or the Bank, as the case may be, is a bank, the holding company parent of the acquiring entity or successor, of this Agreement and the obligations of the Company or the Bank, as the case may be, under this Agreement, and shall provide a copy of such assumption to the Executive prior to any Change in Control. |
17. | Regulatory Matters. |
18. | Section 409A Compliance. |
a. | This Agreement shall be amended to the extent necessary to comply with Section 409A of the Code and regulations promulgated thereunder. Prior to such amendment, and notwithstanding anything contained herein to the contrary, this Agreement shall be construed in a manner consistent with Section 409A of the Code and the parties shall take such actions as are required to comply in good faith with the provisions of Section 409A of the Code such that payments shall not be made to the Executive at such time if such payments shall subject the Executive to the penalty tax under Section 409A of the Code, but rather such payments shall be made by the Bank to the Executive at the earliest time permissible thereafter without the Executive having liability for such penalty tax under Section 409A of the Code. |
b. | If and to the extent termination payments under this Agreement constitute deferred compensation within the meaning of Section 409A of the Code and regulations promulgated thereunder, and if the payment under this Section 9 does not qualify as a short-term deferral under Section 409A of the Code and Treas. Reg. §1.409A-1(b)(4) (or any similar or successor provisions), and the Executive is a Specified Employee within the meaning of Section 409A of the Code and regulations promulgated thereunder, then the payment of such termination payments that constitute deferred compensation under Section 409A of the Code shall comply with Section 409A(a)(2)(B)(i) of the Code and the regulations thereunder, which generally provide that distributions of deferred compensation (within the meaning of Section 409A of the Code) to a Specified Employee that are payable on account of Termination of Employment may not commence prior to the six (6) month anniversary of the Executive’s Termination of Employment (or, if earlier, the date of the Executive’s death). Amounts that would otherwise be distributed to the Executive during such six (6) month period but for the preceding sentence shall be accumulated and paid to the Executive on the 185th day following the date of the Executive’s Termination of Employment. |
d. | To the extent that any reimbursements or in-kind payments are subject to Section 409A of the Code, then such expenses (other than medical expenses) must be incurred before the last day of the second taxable year following the taxable year in which the termination occurred, provided that any reimbursement for such expenses shall be paid before the Executive’s third taxable year following the taxable year in which the termination occurred. For medical expenses, to the extent the Agreement entitles the Executive to reimbursement by the Employer of payments of medical expenses incurred and paid by the Executive but not reimbursed by a person other than the Employer and allowable as a deduction under Section 213 of the Code (disregarding the requirement of Section 213(a) of the Code that the deduction is available only to the extent that such expenses exceed 7.5 percent of adjusted gross income), then the reimbursement applies during the period of time during which the Executive would be entitled (or would, but for the Agreement, be entitled) to continuation coverage under a group health plan of the Bank or the Company under Section 4980B of the Code (COBRA) if the Executive elected such coverage and paid the applicable premiums. |
TABLE OF CONTENTS | |||
Page | |||
Section One | |||
Letter to Shareholders.................................................................................................................................................. | |||
Selected Financial Data............................................................................................................................................... | |||
Management’s Discussion and Analysis of Financial Condition and Results of Operations...................................... | |||
Section Two | |||
Management’s Report on Internal Control Over Financial Reporting........................................................................ | |||
Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting | |||
Report of Independent Registered Public Accounting Firm on the Consolidated Financial Statements.................... | |||
Consolidated Financial Statements............................................................................................................................. | |||
Notes to Consolidated Financial Statements............................................................................................................... | |||
Officers and Corporate Information............................................................................................................................ | |||
C.R. “Chuck” Pennoni | Vito S. Pantilione | |
Chairman | President and Chief Executive Officer |
Selected Financial Data | |||||||||||||||||||
At or for the Year Ended December, 31 | |||||||||||||||||||
2019 | 2018 | 2017 | 2016 | 2015 | |||||||||||||||
Balance Sheet Data: (in thousands) | |||||||||||||||||||
Assets | $ | 1,681,160 | $ | 1,467,398 | $ | 1,137,452 | $ | 1,016,185 | $ | 885,124 | |||||||||
Loans receivable, Net | 1,398,938 | 1,222,082 | 995,184 | 836,373 | 742,365 | ||||||||||||||
Securities Available for Sale | 26,613 | 31,278 | 37,991 | 44,854 | 42,567 | ||||||||||||||
Securities Held to Maturity | 1,167 | 1,113 | 2,268 | 2,224 | 2,181 | ||||||||||||||
Cash and Cash Equivalents | 191,607 | 154,471 | 42,113 | 70,720 | 27,429 | ||||||||||||||
OREO | 4,727 | 5,124 | 7,248 | 10,528 | 16,629 | ||||||||||||||
Deposits | 1,339,219 | 1,183,873 | 866,383 | 788,694 | 665,210 | ||||||||||||||
Borrowings | 148,053 | 118,053 | 128,053 | 93,053 | 98,053 | ||||||||||||||
Shareholders' Equity | 177,605 | 153,557 | 134,780 | 127,134 | 112,040 | ||||||||||||||
Operational Data: (in thousands) | |||||||||||||||||||
Interest Income | $ | 79,540 | $ | 61,874 | $ | 48,655 | $ | 42,202 | $ | 39,410 | |||||||||
Interest Expense | 22,655 | 13,771 | 8,280 | 6,764 | 5,812 | ||||||||||||||
Net Interest Income | 56,885 | 48,103 | 40,375 | 35,438 | 33,598 | ||||||||||||||
Provision for Loan Losses | 2,700 | 1,800 | 2,500 | 1,462 | 3,040 | ||||||||||||||
Net Interest Income after Provision for Loan Losses | 54,185 | 46,303 | 37,875 | 33,976 | 30,558 | ||||||||||||||
Noninterest Income | 3,839 | 3,407 | 1,645 | 10,290 | 5,080 | ||||||||||||||
Noninterest Expense | 17,952 | 16,295 | 15,293 | 16,628 | 16,852 | ||||||||||||||
Income Before Income Tax Expense | 40,072 | 33,415 | 24,227 | 27,638 | 18,786 | ||||||||||||||
Income Tax Expense | 9,785 | 8,377 | 12,389 | 8,695 | 6,843 | ||||||||||||||
Net Income Attributable to Company and Noncontrolling Interest | 30,287 | 25,038 | 11,838 | 18,943 | 11,943 | ||||||||||||||
Net Income Attributable to Noncontrolling Interest | 446 | 214 | 32 | (433 | ) | (1,246 | ) | ||||||||||||
Preferred Stock Dividend and Discount Accretion | 24 | 446 | 1,119 | 1,200 | 1,200 | ||||||||||||||
Net Income Available to Common Shareholders | $ | 29,817 | $ | 24,378 | $ | 10,751 | $ | 17,310 | $ | 9,497 | |||||||||
Per Share Data: 1 | |||||||||||||||||||
Basic Earnings per Common Share | $ | 2.52 | $ | 2.30 | $ | 1.16 | $ | 1.91 | $ | 1.29 | |||||||||
Diluted Earnings per Common Share | $ | 2.48 | $ | 2.07 | $ | 1.03 | $ | 1.59 | $ | 1.11 | |||||||||
Tangible Book Value per Common Share | $ | 14.95 | $ | 12.98 | $ | 12.36 | $ | 11.89 | $ | 10.35 | |||||||||
Performance Ratios: | |||||||||||||||||||
Return on Average Assets | 1.94 | % | 1.98 | % | 1.13 | % | 1.97 | % | 1.25 | % | |||||||||
Return on Average Common Equity | 17.93 | % | 17.99 | % | 9.40 | % | 17.04 | % | 10.82 | % | |||||||||
Net Interest Margin | 3.75 | % | 3.92 | % | 4.01 | % | 3.96 | % | 4.14 | % | |||||||||
Efficiency Ratio | 29.56 | % | 31.63 | % | 36.39 | % | 45.64 | % | 43.57 | % | |||||||||
Capital Ratios: | |||||||||||||||||||
Equity to Assets | 10.67 | % | 10.56 | % | 11.85 | % | 12.51 | % | 12.68 | % | |||||||||
Common Dividend Payout | 22.42 | % | 21.63 | % | 32.39 | % | 13.19 | % | 19.99 | % | |||||||||
Tier 1 Risk-based Capital2 | 15.42 | % | 15.43 | % | 15.56 | % | 16.67 | % | 15.87 | % | |||||||||
Total Risk-based Capital2 | 16.67 | % | 16.69 | % | 16.81 | % | 17.93 | % | 17.13 | % | |||||||||
Asset Quality Ratios: | |||||||||||||||||||
Nonperforming Loans/Total Loans | 0.38 | % | 0.25 | % | 0.45 | % | 1.30 | % | 1.79 | % | |||||||||
Allowance for Loan Losses/Total Loans | 1.54 | % | 1.54 | % | 1.63 | % | 1.83 | % | 2.13 | % | |||||||||
Allowance for Loan Losses/Non-performing Loans | 407.85 | % | 622.30 | % | 364.68 | % | 137.90 | % | 119.01 | % | |||||||||
1 Per share computations give retroactive effect to stock dividends declared in each of 2016, 2017, 2018, and 2020. The 2020 stock dividend was declared before the Company's 2019 financial statements are issued or are available to be issued. | |||||||||||||||||||
2 Capital ratios for Parke Bank |
• | growth in our residential real estate and construction loan portfolios; and |
• | higher yields as a result of higher interest rates; |
• | higher volume and yields in interest bearing deposits. |
For the Years Ended December 31, | |||||||||||||||||
2019 | 2018 | ||||||||||||||||
Average Balance | Interest Income/ Expense | Yield/ Cost | Average Balance | Interest Income/ Expense | Yield/ Cost | ||||||||||||
(Dollars in thousands except Yield/ Cost data) | |||||||||||||||||
Assets | |||||||||||||||||
Loans | $ | 1,326,691 | $ | 75,172 | 5.67 | % | $ | 1,110,915 | $ | 59,139 | 5.32 | % | |||||
Investment securities | 36,801 | 1,161 | 3.15 | % | 42,521 | 1,342 | 3.16 | % | |||||||||
Federal funds sold and cash equivalents | 153,236 | 3,207 | 2.09 | % | 73,768 | 1,393 | 1.89 | % | |||||||||
Total interest-earning assets | 1,516,728 | $ | 79,540 | 5.24 | % | 1,227,204 | $ | 61,874 | 5.04 | % | |||||||
Non-interest earning assets | 61,363 | 57,257 | |||||||||||||||
Allowance for loan losses | (20,369 | ) | (17,583 | ) | |||||||||||||
Total assets | $ | 1,557,722 | $ | 1,266,878 | |||||||||||||
Liabilities and Equity | |||||||||||||||||
Interest bearing deposits | |||||||||||||||||
NOWs | $ | 54,540 | $ | 334 | 0.61 | % | $ | 52,596 | $ | 267 | 0.51 | % | |||||
Money markets | 214,251 | 4,543 | 2.12 | % | 176,359 | 2,894 | 1.64 | % | |||||||||
Savings | 113,354 | 594 | 0.52 | % | 154,229 | 818 | 0.53 | % | |||||||||
Time deposits | 434,569 | 10,172 | 2.34 | % | 314,609 | 4,977 | 1.58 | % | |||||||||
Brokered certificates of deposit | 116,131 | 3,044 | 2.62 | % | 100,244 | 2,115 | 2.11 | % | |||||||||
Total interest-bearing deposits | 932,845 | 18,687 | 2.00 | % | 798,037 | 11,071 | 1.39 | % | |||||||||
Borrowings | 121,198 | 3,968 | 3.27 | % | 119,286 | 2,700 | 2.26 | % | |||||||||
Total interest-bearing liabilities | 1,054,043 | $ | 22,655 | 2.15 | % | 917,323 | $ | 13,771 | 1.50 | % | |||||||
Non-interest bearing deposits | 323,146 | 196,068 | |||||||||||||||
Other liabilities | 12,002 | 7,897 | |||||||||||||||
Total liabilities | 1,389,191 | 1,121,288 | |||||||||||||||
Equity | 168,531 | 145,590 | |||||||||||||||
Total liabilities and equity | $ | 1,557,722 | $ | 1,266,878 | |||||||||||||
Net interest income | $ | 56,885 | $ | 48,103 | |||||||||||||
Interest rate spread | 3.09 | % | 3.54 | % | |||||||||||||
Net interest margin | 3.75 | % | 3.92 | % |
Years ended December 31, | |||||||||||
2019 vs 2018 | |||||||||||
Variance due to change in | |||||||||||
Average Volume | Average Rate | Net Increase/ (Decrease) | |||||||||
(Dollars in thousands) | |||||||||||
Interest Income: | |||||||||||
Loans (net of deferred costs/fees) | $ | 12,042 | $ | 3,991 | $ | 16,033 | |||||
Investment securities | (180 | ) | (1 | ) | (181 | ) | |||||
Federal funds sold and cash equivalents | 1,648 | 166 | 1,814 | ||||||||
Total interest income | 13,510 | 4,156 | 17,666 | ||||||||
Interest Expense: | |||||||||||
Deposits | 2,099 | 5,517 | 7,616 | ||||||||
Borrowed funds | 44 | 1,224 | 1,268 | ||||||||
Total interest expense | 2,143 | 6,741 | 8,884 | ||||||||
Net interest income | $ | 11,367 | $ | (2,585 | ) | $ | 8,782 |
2019 | 2018 | ||||||
(Dollars in thousands) | |||||||
Gain on sale of SBA loans | $ | 116 | 378 | ||||
Other Loan fees | 982 | 1,121 | |||||
Bank owned life insurance income | 601 | 613 | |||||
Service fees on deposit accounts | 1,921 | 1,482 | |||||
Loss on sale and valuation adjustments of OREO | (246 | ) | (690 | ) | |||
Other | 465 | 503 | |||||
Total non-interest income | $ | 3,839 | $ | 3,407 |
• | An increase in fee income related to the commercial deposit accounts; |
• | A decrease in losses related to the sale and valuation adjustment of other real estate owned (OREO); and |
2019 | 2018 | ||||||
(Dollars in thousands) | |||||||
Compensation and benefits | $ | 9,188 | $ | 8,251 | |||
Professional services | 1,946 | 1,419 | |||||
Occupancy and equipment | 1,793 | 1,675 | |||||
Data processing | 1,046 | 835 | |||||
FDIC insurance and other assessments | 56 | 420 | |||||
OREO expense | 415 | 611 | |||||
Other operating expense | 3,508 | 3,084 | |||||
Total non-interest expense | $ | 17,952 | $ | 16,295 |
• | Increase in compensation and benefits; and |
• | Increase in professional services cost. |
December 31, 2019 | December 31, 2018 | ||||||
(Dollars in thousands) | |||||||
Cash and cash equivalents | $ | 191,607 | $ | 154,471 | |||
Investment securities | 27,780 | 32,391 | |||||
Loans held for sale | 190 | 419 | |||||
Loans, net of unearned income | 1,420,749 | 1,241,157 | |||||
Allowance for loan losses | 21,811 | 19,075 | |||||
Total assets | 1,681,160 | 1,467,398 | |||||
Total deposits | 1,339,219 | 1,183,873 | |||||
FHLBNY borrowings | 134,650 | 104,650 | |||||
Subordinated debt | 13,403 | 13,403 | |||||
Total liabilities | 1,501,736 | 1,312,402 | |||||
Total equity | 179,424 | 154,996 | |||||
Total liabilities and equity | 1,681,160 | 1,467,398 |
At December 31, | |||||||||||
2019 | 2018 | 2017 | |||||||||
(Dollars in thousands) | |||||||||||
Securities Held to Maturity at Amortized Cost | |||||||||||
State and political subdivisions | $ | 1,167 | $ | 1,113 | $ | 2,268 | |||||
Securities Available for Sale at Fair Value: | |||||||||||
Corporate debt obligations | $ | 500 | $ | 500 | $ | 1,033 | |||||
Residential mortgage-backed securities | 26,075 | 30,721 | 36,863 | ||||||||
Collateralized mortgage obligations | 38 | 57 | 95 | ||||||||
Total securities available for sale | 26,613 | 31,278 | 37,991 | ||||||||
Total | $ | 27,780 | $ | 32,391 | $ | 40,259 |
At December 31, 2019 | |||||||||||||||||||||||||||||||
One to Five Years | After Five to Ten Years | More Than Ten Years | Total Investment Securities | ||||||||||||||||||||||||||||
Amortized Cost | Average Yield | Amortized Cost | Average Yield | Amortized Cost | Average Yield | Amortized Cost | Average Yield | Fair Value | |||||||||||||||||||||||
(Amounts in thousands, except yields) | |||||||||||||||||||||||||||||||
Securities Held to Maturity: | |||||||||||||||||||||||||||||||
State and political subdivisions | $ | — | — | % | $ | 1,167 | 4.76 | % | $ | — | — | % | $ | 1,167 | 4.76 | % | $ | 1,430 | |||||||||||||
Securities Available for Sale: | |||||||||||||||||||||||||||||||
Corporate debt obligations | $ | — | — | % | $ | 500 | 4.75 | % | $ | — | — | % | $ | 500 | 4.75 | % | $ | 500 | |||||||||||||
Residential mortgage-backed securities | 156 | — | 11,379 | 2.36 | 14,454 | 2.49 | 25,989 | 2.41 | 26,075 | ||||||||||||||||||||||
Collateralized mortgage obligations | — | — | — | — | 37 | 4.61 | 37 | 4.61 | 38 | ||||||||||||||||||||||
Total securities available for sale | 156 | — | 11,879 | 2.45 | 14,491 | 2.49 | 26,526 | 2.45 | 26,613 | ||||||||||||||||||||||
Total | $ | 156 | — | % | $ | 13,046 | 2.63 | % | $ | 14,491 | 2.49 | % | $ | 27,693 | 2.54 | % | $ | 28,043 |
December 31, 2019 | December 31, 2018 | December 31, 2017 | December 31, 2016 | December 31, 2015 | |||||||||||||||
Amount | Amount | Amount | Amount | Amount | |||||||||||||||
(Dollars in thousands) | |||||||||||||||||||
Commercial and Industrial | $ | 36,777 | $ | 34,640 | $ | 38,972 | $ | 26,774 | $ | 27,140 | |||||||||
Construction | 231,095 | 139,877 | 95,625 | 67,294 | 52,995 | ||||||||||||||
Real Estate Mortgage: | |||||||||||||||||||
Commercial – Owner Occupied | 136,753 | 135,617 | 126,250 | 123,898 | 172,040 | ||||||||||||||
Commercial – Non-owner Occupied | 298,204 | 321,580 | 270,472 | 268,123 | 256,471 | ||||||||||||||
Residential – 1 to 4 Family | 636,891 | 545,391 | 416,317 | 309,340 | 213,266 | ||||||||||||||
Residential – Multifamily | 68,258 | 49,628 | 47,832 | 39,804 | 18,113 | ||||||||||||||
Consumer | 12,771 | 14,424 | 16,249 | 16,720 | 18,476 | ||||||||||||||
Total Loans | $ | 1,420,749 | $ | 1,241,157 | $ | 1,011,717 | $ | 851,953 | $ | 758,501 |
Due within one year | Due after one through five years | Due after five years | Total | ||||||||||||
(Dollars in thousands) | |||||||||||||||
Commercial and Industrial | $ | 16,226 | $ | 6,654 | $ | 13,897 | $ | 36,777 | |||||||
Construction | 147,972 | 76,827 | 6,296 | 231,095 | |||||||||||
Commercial Real Estate Mortgage: | |||||||||||||||
Commercial - Owner Occupied | 10,383 | 28,535 | 97,835 | 136,753 | |||||||||||
Commercial - Non-Owner Occupied | 12,471 | 115,880 | 169,853 | 298,204 | |||||||||||
Total | $ | 187,052 | $ | 227,896 | $ | 287,881 | $ | 702,829 | |||||||
Loans at fixed interest rates | $ | 20,811 | $ | 35,258 | $ | 41,525 | $ | 97,594 | |||||||
Loans at floating/variable interest rates | 166,240 | 192,638 | 246,357 | 605,235 | |||||||||||
Total | $ | 187,051 | $ | 227,896 | $ | 287,882 | $ | 702,829 |
December 31 | |||||||
2019 | 2018 | ||||||
(Dollars in thousands) | |||||||
Noninterest-bearing | $ | 259,269 | $ | 360,329 | |||
Interest-bearing | |||||||
Checking | 55,606 | 52,721 | |||||
Savings | 105,554 | 131,127 | |||||
Money market | 232,115 | 208,335 | |||||
Time deposits | 686,675 | 431,361 | |||||
Total deposits | $ | 1,339,219 | $ | 1,183,873 |
2019 | ||||||||
Average Balance | Yield/Rate | Percent of Total | ||||||
(Dollars in thousands, except percentages) | ||||||||
NOWs | $ | 54,540 | 0.61% | 4.34 | % | |||
Money markets | 214,251 | 2.12% | 17.06 | % | ||||
Savings | 113,354 | 0.52% | 9.03 | % | ||||
Time deposits | 434,569 | 2.34% | 34.60 | % | ||||
Brokered CDs | 116,131 | 2.62% | 9.25 | % | ||||
Total interest-bearing deposits | 932,845 | 2.00% | ||||||
Non-interest bearing demand deposits | 323,146 | 25.72 | % | |||||
Total deposits | $ | 1,255,991 | 100.00 | % |
2018 | ||||||||
Average Balance | Yield/Rate | Percent of Total | ||||||
(Dollars in thousands, except percentages) | ||||||||
NOWs | $ | 52,596 | 0.51% | 5.29 | % | |||
Money markets | 176,359 | 1.64% | 17.75 | % | ||||
Savings | 154,229 | 0.53% | 15.51 | % | ||||
Time deposits | 314,609 | 1.58% | 31.65 | % | ||||
Brokered CDs | 100,244 | 2.11% | 10.08 | % | ||||
Total interest-bearing deposits | 798,037 | 1.39% | ||||||
Non-interest bearing demand deposits | 196,068 | 19.72 | % | |||||
Total deposits | $ | 994,105 | 100.00 | % |
2017 | ||||||||
Average Balance | Yield/Rate | Percent of Total | ||||||
(Dollars in thousands, except percentages) | ||||||||
NOWs | $ | 42,582 | 0.49% | 5.26 | % | |||
Money markets | 138,084 | 0.78% | 17.06 | % | ||||
Savings | 180,908 | 0.53% | 22.36 | % | ||||
Time deposits | 288,617 | 1.17% | 35.66 | % | ||||
Brokered CDs | 74,357 | 1.16% | 9.19 | % | ||||
Total interest-bearing deposits | 724,548 | 0.89% | ||||||
Non-interest bearing demand deposits | 84,758 | 10.47 | % | |||||
Total deposits | $ | 809,306 | 100.00 | % |
Maturity Period | Certificates of Deposit | |||
(Dollars in thousands) | ||||
Within three months | $ | 109,300 | ||
Three through twelve months | 291,027 | |||
Over twelve months | 96,253 | |||
Total | $ | 496,580 |
December 31, | |||||||
2019 | 2018 | ||||||
(Dollars in thousands, except rates) | |||||||
Amount outstanding at year end | $ | 134,650 | $ | 104,650 | |||
Weighted average interest rates at year end | 2.41 | % | 2.67 | % | |||
Maximum outstanding at any month end | $ | 134,650 | $ | 134,650 | |||
Average outstanding for the years | $ | 107,795 | $ | 105,883 | |||
Weighted average interest rate during the year | 2.79 | % | 2.00 | % |
December 31, 2019 | December 31, 2018 | December 31, 2017 | December 31, 2016 | December 31, 2015 | |||||||||||||||||||||
Amount | % of Loans to total Loans | Amount | % of Loans to total Loans | Amount | % of Loans to total Loans | Amount | % of Loans to total Loans | Amount | % of Loans to total Loans | ||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||
Commercial and Industrial | $ | 964 | 2.6 | % | $ | 718 | 2.8 | % | $ | 684 | 4.0 | % | $ | 1,188 | 3.1 | % | $ | 952 | 3.6 | % | |||||
Construction | 2,807 | 16.3 | 1,694 | 11.3 | 2,068 | 9.4 | 2,764 | 7.9 | 2,748 | 7.0 | |||||||||||||||
Real Estate Mortgage: | |||||||||||||||||||||||||
Commercial – Owner Occupied | 2,023 | 9.6 | 2,062 | 10.9 | 2,017 | 12.5 | 2,082 | 14.5 | 3,267 | 22.7 | |||||||||||||||
Commercial – Non-owner Occupied | 5,860 | 21.0 | 5,853 | 25.9 | 4,630 | 26.7 | 3,889 | 31.5 | 3,838 | 33.8 | |||||||||||||||
Residential – 1 to 4 Family | 9,151 | 44.8 | 7,917 | 43.9 | 6,277 | 41.1 | 4,916 | 36.3 | 4,802 | 28.1 | |||||||||||||||
Residential – Multifamily | 819 | 4.8 | 621 | 4.0 | 627 | 4.7 | 505 | 4.7 | 254 | 2.4 | |||||||||||||||
Consumer | 187 | 0.9 | 210 | 1.2 | 230 | 1.6 | 236 | 2.0 | 275 | 2.4 | |||||||||||||||
Total Loans | $ | 21,811 | 100.0 | % | $ | 19,075 | 100.0 | % | $ | 16,533 | 100.0 | % | $ | 15,580 | 100.0 | % | $ | 16,136 | 100.0 | % |
December 31, 2019 | 30-59 Days Past Due | 60-89 Days Past Due | Greater than 90 Days and Not Accruing (NPL) | Greater than 90 Days and Accruing | Current | Total Loans | NPL to Loan Type % | |||||||||||||||||||
(Dollars in thousands except ratios) | ||||||||||||||||||||||||||
Commercial and Industrial | $ | — | $ | — | $ | 286 | $ | — | $ | 36,491 | $ | 36,777 | 0.78 | % | ||||||||||||
Construction | — | — | 1,365 | — | 229,730 | 231,095 | 0.59 | % | ||||||||||||||||||
Real Estate Mortgage: | ||||||||||||||||||||||||||
Commercial – Owner Occupied | — | 1,722 | 2,702 | — | 132,329 | 136,753 | 1.98 | % | ||||||||||||||||||
Commercial – Non-owner Occupied | — | — | 70 | — | 298,134 | 298,204 | 0.02 | % | ||||||||||||||||||
Residential – 1 to 4 Family | — | 262 | 925 | — | 635,704 | 636,891 | 0.15 | % | ||||||||||||||||||
Residential – Multifamily | — | — | — | — | 68,258 | 68,258 | — | % | ||||||||||||||||||
Consumer | — | — | — | — | 12,771 | 12,771 | — | % | ||||||||||||||||||
Total Loans | $ | — | $ | 1,984 | $ | 5,348 | $ | — | $ | 1,413,417 | $ | 1,420,749 | 0.38 | % |
Amount | Ratio | Amount | Ratio | ||||||||||
(Dollars in thousands except ratios) | |||||||||||||
Company | Parke Bank | ||||||||||||
Total risk-based capital | $ | 208,013 | 16.70 | % | $ | 207,620 | 16.67 | % | |||||
Tier 1 risk-based capital | $ | 192,365 | 15.44 | % | $ | 191,977 | 15.42 | % | |||||
Tier 1 leverage | $ | 192,365 | 11.87 | % | $ | 191,977 | 11.85 | % | |||||
Tier 1 common equity | $ | 177,068 | 14.21 | % | $ | 190,158 | 15.27 | % |
As of December 31, 2019 | |||||||||||||||||||||||
3 Months or Less | Over 3 Months Through 12 Months | Over 1 Year Through 3 Years | Over 3 Years Through 5 Years | Over 5 Years | Total | ||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||
Interest-earning assets: | |||||||||||||||||||||||
Loans (1) | $ | 183,678 | $ | 254,287 | $ | 421,382 | $ | 230,494 | $ | 325,422 | $ | 1,415,263 | |||||||||||
Investment securities | 1,670 | 3,536 | 7,966 | 6,746 | 7,862 | 27,780 | |||||||||||||||||
Federal funds sold and cash equivalents | 181,525 | — | — | — | — | 181,525 | |||||||||||||||||
Total interest-earning assets | $ | 366,873 | $ | 257,823 | $ | 429,348 | $ | 237,240 | $ | 333,284 | $ | 1,624,568 | |||||||||||
Interest-bearing liabilities: | |||||||||||||||||||||||
NOW, Saving and Money market deposits | $ | 22,700 | $ | 68,100 | $ | 182,375 | $ | 109,819 | $ | 10,282 | $ | 393,276 | |||||||||||
Retail time deposits | 93,180 | 310,376 | 148,928 | 3,548 | 14 | 556,046 | |||||||||||||||||
Brokered time deposits | 56,407 | 74,221 | — | — | — | 130,628 | |||||||||||||||||
Borrowed funds | 21,000 | 91,150 | 22,500 | — | — | 134,650 | |||||||||||||||||
Total interest-bearing liabilities | $ | 193,287 | $ | 543,847 | $ | 353,803 | $ | 113,367 | $ | 10,296 | $ | 1,214,600 | |||||||||||
Interest rate sensitive gap | $ | 173,586 | $ | (286,024 | ) | $ | 75,545 | $ | 123,873 | $ | 322,988 | $ | 409,968 | ||||||||||
Cumulative interest rate gap | $ | 173,586 | $ | (112,438 | ) | $ | (36,893 | ) | $ | 86,980 | $ | 409,968 | $ | — | |||||||||
Ratio of rate-sensitive assets to rate-sensitive liabilities | 189.8 | % | 47.4 | % | 121.4 | % | 209.3 | % | 3,237.0 | % | 133.8 | % | |||||||||||
Cumulative interest sensitivity gap to total assets | 10.3 | % | (6.7 | )% | (2.2 | )% | 5.2 | % | 24.4 | % | — |
Three Months Ended | |||||||||||||||
December 31, | September 30, | June 30, | March 31, | ||||||||||||
(Dollars in thousands, except per share amounts) | |||||||||||||||
2019 | |||||||||||||||
Interest income | $ | 20,941 | $ | 20,418 | $ | 19,824 | $ | 18,357 | |||||||
Interest expense | 6,270 | 5,927 | 5,533 | 4,925 | |||||||||||
Net interest income | 14,671 | 14,491 | 14,291 | 13,432 | |||||||||||
Provision for loan losses | 650 | 900 | 450 | 700 | |||||||||||
Income before income tax expense | 10,075 | 10,416 | 10,090 | 9,491 | |||||||||||
Income tax expense | 2,437 | 2,551 | 2,481 | 2,316 | |||||||||||
Net income | 7,548 | 7,764 | 7,468 | 7,062 | |||||||||||
Preferred stock dividends | 8 | 8 | 8 | 1 | |||||||||||
Net income available to common shareholders | 7,540 | 7,756 | 7,460 | 7,061 | |||||||||||
Net income per common share: | |||||||||||||||
Basic | $ | 0.64 | $ | 0.65 | $ | 0.63 | $ | 0.60 | |||||||
Diluted | $ | 0.63 | $ | 0.64 | $ | 0.62 | $ | 0.59 |
Three Months Ended | |||||||||||||||
December 31, | September 30, | June 30, | March 31, | ||||||||||||
(Dollars in thousands, except per share amounts) | |||||||||||||||
2018 | |||||||||||||||
Interest income | $ | 17,469 | $ | 16,015 | $ | 14,883 | $ | 13,508 | |||||||
Interest expense | 4,265 | 3,737 | 3,285 | 2,484 | |||||||||||
Net interest income | 13,204 | 12,278 | 11,598 | 11,024 | |||||||||||
Provision for loan losses | 600 | 600 | 200 | 400 | |||||||||||
Income before income tax expense | 8,937 | 8,833 | 8,050 | 7,595 | |||||||||||
Income tax expense | 2,004 | 2,615 | 1,923 | 1,835 | |||||||||||
Net income | 6,827 | 6,126 | 6,111 | 5,760 | |||||||||||
Preferred stock dividends | 17 | 22 | 168 | 239 | |||||||||||
Net income available to common shareholders | 6,810 | 6,104 | 5,943 | 5,521 | |||||||||||
Net income per common share: | |||||||||||||||
Basic | $ | 0.59 | $ | 0.55 | $ | 0.60 | $ | 0.56 | |||||||
Diluted | $ | 0.57 | $ | 0.51 | $ | 0.51 | $ | 0.48 |
Contents | |
Page | |
Management's Report on Internal Control Over Financial Reporting........................................................ | |
Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting | |
Report of Independent Registered Public Accounting Firm on the Consolidated Financial Statements.... | |
Financial Statements | |
Consolidated Balance Sheets.............................................................................................................. | |
Consolidated Statements of Income.................................................................................................... | |
Consolidated Statements of Comprehensive Income.......................................................................... | |
Consolidated Statements of Equity..................................................................................................... | |
Consolidated Statements of Cash Flows............................................................................................. | |
Notes to Consolidated Financial Statements....................................................................................... |
Vito S. Pantilione | John F. Hawkins |
President and Chief Executive Officer | Senior Vice President and Chief Financial Officer |
December 31, | December 31, | |||||||
2019 | 2018 | |||||||
Assets | ||||||||
Cash and due from banks | $ | 10,082 | $ | 5,915 | ||||
Interest bearing deposits with banks | 181,525 | 148,556 | ||||||
Cash and cash equivalents | 191,607 | 154,471 | ||||||
Investment securities available for sale, at fair value | 26,613 | 31,278 | ||||||
Investment securities held to maturity (fair value of $1,430 at December 31, 2019 and $1,292 at December 31, 2018) | 1,167 | 1,113 | ||||||
Total investment securities | 27,780 | 32,391 | ||||||
Loans held for sale | 190 | 419 | ||||||
Loans, net of unearned income | 1,420,749 | 1,241,157 | ||||||
Less: Allowance for loan losses | (21,811 | ) | (19,075 | ) | ||||
Net loans | 1,398,938 | 1,222,082 | ||||||
Accrued interest receivable | 6,069 | 5,191 | ||||||
Premises and equipment, net | 6,946 | 6,783 | ||||||
Restricted stock | 7,440 | 5,858 | ||||||
Bank owned life insurance (BOLI) | 26,410 | 25,809 | ||||||
Deferred tax asset | 6,285 | 6,511 | ||||||
Other | 9,495 | 7,883 | ||||||
Total Assets | $ | 1,681,160 | $ | 1,467,398 | ||||
Liabilities and Equity | ||||||||
Liabilities | ||||||||
Deposits | ||||||||
Noninterest-bearing deposits | $ | 259,269 | $ | 360,329 | ||||
Interest-bearing deposits | 1,079,950 | 823,544 | ||||||
Total deposits | 1,339,219 | 1,183,873 | ||||||
FHLBNY borrowings | 134,650 | 104,650 | ||||||
Subordinated debentures | 13,403 | 13,403 | ||||||
Accrued interest payable | 2,260 | 1,390 | ||||||
Other | 12,204 | 9,086 | ||||||
Total liabilities | 1,501,736 | 1,312,402 | ||||||
Equity | ||||||||
Preferred stock,1,000,000 shares authorized, $1,000 liquidation value Series B non-cumulative convertible; 500 shares and 1,224 shares outstanding at December 31, 2019 and 2018, respectively | 500 | 1,224 | ||||||
Common stock, $.10 par value; authorized 15,000,000 shares; Issued: 12,132,855 shares and 10,953,081 shares at December 31, 2019 and 2018, respectively | 1,213 | 1,095 | ||||||
Additional paid-in capital | 134,706 | 112,807 | ||||||
Retained earnings | 44,143 | 42,079 | ||||||
Accumulated other comprehensive loss | 58 | (633 | ) | |||||
Treasury stock, 284,522 shares at December 31, 2019 and 2018, at cost | (3,015 | ) | (3,015 | ) | ||||
Total shareholders’ equity | 177,605 | 153,557 | ||||||
Noncontrolling interest in consolidated subsidiaries | 1,819 | 1,439 | ||||||
Total equity | 179,424 | 154,996 | ||||||
Total liabilities and equity | $ | 1,681,160 | $ | 1,467,398 |
2019 | 2018 | |||||||
Interest income: | ||||||||
Interest and fees on loans | $ | 75,172 | $ | 59,139 | ||||
Interest and dividends on investments | 1,161 | 1,342 | ||||||
Interest on federal funds sold and deposits with banks | 3,207 | 1,393 | ||||||
Total interest income | 79,540 | 61,874 | ||||||
Interest expense: | ||||||||
Interest on deposits | 18,687 | 11,071 | ||||||
Interest on borrowings | 3,968 | 2,700 | ||||||
Total interest expense | 22,655 | 13,771 | ||||||
Net interest income | 56,885 | 48,103 | ||||||
Provision for loan losses | 2,700 | 1,800 | ||||||
Net interest income after provision for loan losses | 54,185 | 46,303 | ||||||
Non-interest income | ||||||||
Gain on sale of SBA loans | 116 | 378 | ||||||
Other loan fees | 982 | 1,121 | ||||||
Bank owned life insurance income | 601 | 613 | ||||||
Service fees on deposit accounts | 1,921 | 1,482 | ||||||
Net loss on sale and valuation adjustments of OREO | (246 | ) | (690 | ) | ||||
Other | 465 | 503 | ||||||
Total non-interest income | 3,839 | 3,407 | ||||||
Non-interest expense | ||||||||
Compensation and benefits | 9,188 | 8,251 | ||||||
Professional services | 1,946 | 1,419 | ||||||
Occupancy and equipment | 1,793 | 1,675 | ||||||
Data processing | 1,046 | 835 | ||||||
FDIC insurance and other assessments | 56 | 420 | ||||||
OREO expense | 415 | 611 | ||||||
Other operating expense | 3,508 | 3,084 | ||||||
Total non-interest expense | 17,952 | 16,295 | ||||||
Income before income tax expense | 40,072 | 33,415 | ||||||
Income tax expense | 9,785 | 8,377 | ||||||
Net income attributable to Company and noncontrolling interest | 30,287 | 25,038 | ||||||
Less: Net income attributable to noncontrolling interest | (446 | ) | (214 | ) | ||||
Net income attributable to Company | 29,841 | 24,824 | ||||||
Less: Preferred stock dividend | (24 | ) | (446 | ) | ||||
Net income available to common shareholders | $ | 29,817 | $ | 24,378 | ||||
Earnings per common share | ||||||||
Basic | $ | 2.52 | $ | 2.30 | ||||
Diluted | $ | 2.48 | $ | 2.07 | ||||
Weighted average common shares outstanding | ||||||||
Basic | 11,838,096 | 10,592,414 | ||||||
Diluted | 12,011,082 | 12,002,479 |
For the Year ended December 31, | ||||||||
2019 | 2018 | |||||||
(Dollars in thousands) | ||||||||
Net income | $ | 30,287 | $ | 25,038 | ||||
Unrealized gains on investment securities, net of reclassification into income: | ||||||||
Unrealized (losses) gains on non-OTTI securities | 918 | (624 | ) | |||||
Tax impact on unrealized gain (loss) | (227 | ) | 148 | |||||
Reclassification of prior tax effects | — | (27 | ) | |||||
Total unrealized (losses) gains on investment securities | 691 | (503 | ) | |||||
Comprehensive income | 30,978 | 24,535 | ||||||
Less: Comprehensive income attributable to noncontrolling interests | (446 | ) | (214 | ) | ||||
Comprehensive income attributable to the Company | $ | 30,532 | $ | 24,321 |
Parke Bancorp, Inc. and Subsidiaries | ||||||||||||||||||||||||||||||||||||||
Consolidated Statements of Equity | ||||||||||||||||||||||||||||||||||||||
Years Ended December 31, 2019, and 2018 | ||||||||||||||||||||||||||||||||||||||
(Dollars in thousands except share data) | ||||||||||||||||||||||||||||||||||||||
Preferred Stock | Shares of Common Stock issued | Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Treasury Stock | Total Shareholders’ Equity | Non-Controlling Interest | Total Equity | |||||||||||||||||||||||||||||
Balance, December 31, 2017 | $ | 15,971 | 8,301,497 | $ | 830 | $ | 81,940 | $ | 39,184 | $ | (130 | ) | $ | (3,015 | ) | $ | 134,780 | $ | — | $ | 134,780 | |||||||||||||||||
Retained earnings adjustment for prior tax effects | — | — | — | — | 27 | — | — | 27 | — | 27 | ||||||||||||||||||||||||||||
Capital activity by minority (non-controlling) interest | — | — | — | — | — | — | — | — | 1,225 | 1,225 | ||||||||||||||||||||||||||||
Net income | — | — | — | — | 24,824 | — | — | 24,824 | 214 | 25,038 | ||||||||||||||||||||||||||||
Common stock options exercised | — | 5,539 | 1 | 42 | — | — | — | 43 | — | 43 | ||||||||||||||||||||||||||||
Preferred stock shares conversion | (14,747 | ) | 1,843,761 | 184 | 14,563 | — | — | — | — | — | — | |||||||||||||||||||||||||||
Other comprehensive loss | — | — | — | — | — | (503 | ) | — | (503 | ) | — | (503 | ) | |||||||||||||||||||||||||
Stock compensation expense | — | — | — | 109 | — | — | — | 109 | — | 109 | ||||||||||||||||||||||||||||
Stock dividend | — | 802,284 | 80 | 16,153 | (16,237 | ) | — | — | (4 | ) | — | (4 | ) | |||||||||||||||||||||||||
Dividend on preferred stock | — | — | — | — | (446 | ) | — | — | (446 | ) | — | (446 | ) | |||||||||||||||||||||||||
Dividend on common stock | — | — | — | — | (5,273 | ) | — | — | (5,273 | ) | — | (5,273 | ) | |||||||||||||||||||||||||
Balance, December 31, 2018 | $ | 1,224 | 10,953,081 | $ | 1,095 | $ | 112,807 | $ | 42,079 | $ | (633 | ) | $ | (3,015 | ) | $ | 153,557 | $ | 1,439 | $ | 154,996 | |||||||||||||||||
Earnings distribution to non-controlling interest | — | — | — | — | — | — | — | — | (66 | ) | (66 | ) | ||||||||||||||||||||||||||
Net income | — | — | — | — | 29,841 | — | — | 29,841 | 446 | 30,287 | ||||||||||||||||||||||||||||
Common stock options exercised | — | 12,121 | 1 | 47 | — | — | — | 48 | — | 48 | ||||||||||||||||||||||||||||
Preferred stock shares conversion | (724 | ) | 90,532 | 9 | 715 | — | — | — | — | — | — | |||||||||||||||||||||||||||
Other comprehensive income | — | — | — | — | — | 691 | — | 691 | — | 691 | ||||||||||||||||||||||||||||
Stock compensation expense | — | — | — | 176 | — | — | — | 176 | — | 176 | ||||||||||||||||||||||||||||
Stock dividend | — | 1,077,121 | 108 | 20,961 | (21,069 | ) | — | — | — | — | — | |||||||||||||||||||||||||||
Dividend on preferred stock | — | — | — | — | (24 | ) | — | — | (24 | ) | — | (24 | ) | |||||||||||||||||||||||||
Dividend on common stock | — | — | — | — | (6,684 | ) | — | — | (6,684 | ) | — | (6,684 | ) | |||||||||||||||||||||||||
Balance, December 31, 2019 | $ | 500 | 12,132,855 | $ | 1,213 | $ | 134,706 | $ | 44,143 | $ | 58 | $ | (3,015 | ) | $ | 177,605 | $ | 1,819 | $ | 179,424 |
2019 | 2018 | |||||||
Cash Flows from Operating Activities | ||||||||
Net income | $ | 30,287 | $ | 25,038 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 431 | 380 | ||||||
Provision for loan losses | 2,700 | 1,800 | ||||||
Increase in value of bank-owned life insurance | (601 | ) | (613 | ) | ||||
Gain on sale of SBA loans | (116 | ) | (378 | ) | ||||
SBA loans originated for sale | (940 | ) | (4,696 | ) | ||||
Proceeds from sale of SBA loans originated for sale | 1,285 | 6,196 | ||||||
Net loss on sale of OREO and valuation adjustments | 246 | 690 | ||||||
Net accretion of purchase premiums and discounts on securities | 38 | 45 | ||||||
Stock based compensation | 176 | 109 | ||||||
Deferred income tax | (163 | ) | 58 | |||||
Net changes in: | ||||||||
Increase in accrued interest receivable and other assets | (181 | ) | (1,657 | ) | ||||
Increase in accrued interest payable and other accrued liabilities | 1,226 | 1,929 | ||||||
Other | 45 | — | ||||||
Net cash provided by operating activities | 34,433 | 28,901 | ||||||
Cash Flows from Investing Activities | ||||||||
Repayments and maturities of investment securities available for sale | 5,491 | 5,995 | ||||||
Repayments and maturities of investment securities held to maturity | — | 1,204 | ||||||
Net increase in loans | (182,307 | ) | (230,320 | ) | ||||
Purchases of bank premises and equipment | (594 | ) | (138 | ) | ||||
Proceeds from sale of OREO, net | 2,857 | 3,056 | ||||||
Redemptions (purchases) of restricted stock | (1,582 | ) | 314 | |||||
Net cash used in investing activities | (176,135 | ) | (219,889 | ) | ||||
Cash Flows from Financing Activities | ||||||||
Cash dividends | (6,490 | ) | (5,412 | ) | ||||
Proceeds from exercise of stock options | 48 | 43 | ||||||
Capital contribution (earnings distributions) from non-controlling interest | (66 | ) | 1,225 | |||||
Net (decrease) increase in FHLBNY and short-term borrowings | 30,000 | (10,000 | ) | |||||
Net (decrease) increase in noninterest-bearing deposits | (101,060 | ) | 235,973 | |||||
Net increase in interest-bearing deposits | 256,406 | 81,517 | ||||||
Net cash provided by financing activities | 178,838 | 303,346 | ||||||
Increase in cash and cash equivalents | 37,136 | 112,358 | ||||||
Cash and Cash Equivalents, January 1, | 154,471 | 42,113 | ||||||
Cash and Cash Equivalents, December 31, | $ | 191,607 | $ | 154,471 | ||||
Supplemental Disclosure of Cash Flow Information: | ||||||||
Interest paid | $ | 21,785 | $ | 13,100 | ||||
Income taxes paid | $ | 9,900 | $ | 8,654 | ||||
Non-cash Investing and Financing Items | ||||||||
Loans transferred to OREO | $ | 2,751 | $ | 1,622 | ||||
Establishment of lease liability and right-of-use asset | $ | 2,785 | $ | — |
• | Reduction (absolute or contingent) of the stated interest rate; |
• | Extension of the maturity date or dates at a stated interest rate lower than the current market rate for new debt with similar risk; |
• | Reduction (absolute or contingent) of the face amount or maturity amount of the debt as stated in the instrument or other agreement; or |
• | Reduction (absolute or contingent) of accrued interest. |
Year ended December 31, | 2019 | 2018 | |||||
(Dollars in thousands) | |||||||
Investment securities: | |||||||
Net unrealized gains (losses) arising during the period | $ | 918 | $ | (624 | ) | ||
Tax effect related to the unrealized loss during the periods | (227 | ) | 148 | ||||
Reclassification of prior tax effects | — | (27 | ) | ||||
Change in other comprehensive income | $ | 691 | $ | (503 | ) |
2019 | 2018 | ||||||
(Dollars in thousands, except share data) | |||||||
Basic earnings per common share | |||||||
Net income available to common shareholders | $ | 29,817 | $ | 24,378 | |||
Basic weighted-average common shares outstanding | 11,838,096 | 10,592,414 | |||||
Basic earnings per common share | $ | 2.52 | $ | 2.30 | |||
Diluted earnings per common share | |||||||
Net income available to common shareholders | $ | 29,817 | $ | 24,378 | |||
Dividend on Preferred Series B | 24 | 446 | |||||
Net income attributable to diluted common shares | $ | 29,841 | $ | 24,824 | |||
Basic weighted-average common shares outstanding | 11,838,096 | 10,592,414 | |||||
Dilutive potential common shares | 172,986 | 1,410,065 | |||||
Total diluted weighted-average common shares outstanding | 12,011,082 | 12,002,479 | |||||
Diluted earnings per common share | $ | 2.48 | $ | 2.07 |
As of December 31, 2019 | Amortized cost | Gross unrealized gains | Gross unrealized losses | Fair value | |||||||||||
(Dollars in thousands) | |||||||||||||||
Available for sale: | |||||||||||||||
Corporate debt obligations | $ | 500 | $ | — | $ | — | $ | 500 | |||||||
Residential mortgage-backed securities | 25,989 | 282 | 196 | 26,075 | |||||||||||
Collateralized mortgage obligations | 37 | 1 | — | 38 | |||||||||||
Total available for sale | $ | 26,526 | $ | 283 | $ | 196 | $ | 26,613 | |||||||
Held to maturity: | |||||||||||||||
States and political subdivisions | $ | 1,167 | $ | 263 | $ | — | $ | 1,430 |
As of December 31, 2018 | Amortized cost | Gross unrealized gains | Gross unrealized losses | Fair value | |||||||||||
(Dollars in thousands) | |||||||||||||||
Available for sale: | |||||||||||||||
Corporate debt obligations | $ | 500 | $ | — | $ | — | $ | 500 | |||||||
Residential mortgage-backed securities | 31,553 | 74 | 906 | 30,721 | |||||||||||
Collateralized mortgage obligations | 56 | 1 | — | 57 | |||||||||||
Total available for sale | $ | 32,109 | $ | 75 | $ | 906 | $ | 31,278 | |||||||
Held to maturity: | |||||||||||||||
States and political subdivisions | $ | 1,113 | $ | 179 | $ | — | $ | 1,292 |
Amortized Cost | Fair Value | ||||||
(Dollars in thousands) | |||||||
Available for sale: | |||||||
Due within one year | $ | — | $ | — | |||
Due after one year through five years | 156 | 150 | |||||
Due after five years through ten years | 11,879 | 11,942 | |||||
Due after ten years | 14,491 | 14,521 | |||||
Total available for sale | $ | 26,526 | $ | 26,613 | |||
Held to maturity: | |||||||
Due within one year | $ | — | $ | — | |||
Due after one year through five years | — | — | |||||
Due after five years through ten years | 1,167 | 1,430 | |||||
Due after ten years | — | — | |||||
Total held to maturity | $ | 1,167 | $ | 1,430 |
As of December 31, 2019 | Less Than 12 Months | 12 Months or Greater | Total | |||||||||||||||||||||
Description of Securities | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | ||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Available for sale: | ||||||||||||||||||||||||
Residential mortgage-backed securities | $ | 232 | $ | 1 | $ | 10,271 | $ | 195 | $ | 10,503 | $ | 196 | ||||||||||||
Total available for sale | $ | 232 | $ | 1 | $ | 10,271 | $ | 195 | $ | 10,503 | $ | 196 |
As of December 31, 2018 | Less Than 12 Months | 12 Months or Greater | Total | |||||||||||||||||||||
Description of Securities | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | ||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Available for sale: | ||||||||||||||||||||||||
Residential mortgage-backed securities | $ | 12,665 | $ | 257 | $ | 14,527 | $ | 649 | $ | 27,192 | $ | 906 | ||||||||||||
Total available for sale | $ | 12,665 | $ | 257 | $ | 14,527 | $ | 649 | $ | 27,192 | $ | 906 |
December 31, 2019 | December 31, 2018 | ||||||
(Dollars in thousands) | |||||||
Commercial and Industrial | $ | 36,777 | $ | 34,640 | |||
Construction | 231,095 | 139,877 | |||||
Real Estate Mortgage: | |||||||
Commercial – Owner Occupied | 136,753 | 135,617 | |||||
Commercial – Non-owner Occupied | 298,204 | 321,580 | |||||
Residential – 1 to 4 Family | 636,891 | 545,391 | |||||
Residential – Multifamily | 68,258 | 49,628 | |||||
Consumer | 12,771 | 14,424 | |||||
Total Loans | $ | 1,420,749 | $ | 1,241,157 |
December 31, 2019 | 30-59 Days Past Due | 60-89 Days Past Due | Greater than 90 Days and Not Accruing | Total Past Due | Current | Total Loans | Loans > 90 Days and Accruing | ||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||||
Commercial and Industrial | $ | — | $ | — | $ | 286 | $ | 286 | $ | 36,491 | $ | 36,777 | $ | — | |||||||||||||
Construction | — | — | 1,365 | 1,365 | 229,730 | 231,095 | — | ||||||||||||||||||||
Real Estate Mortgage: | |||||||||||||||||||||||||||
Commercial – Owner Occupied | — | 1,722 | 2,702 | 4,424 | 132,329 | 136,753 | — | ||||||||||||||||||||
Commercial – Non-owner Occupied | — | — | 70 | 70 | 298,134 | 298,204 | — | ||||||||||||||||||||
Residential – 1 to 4 Family | — | 262 | 925 | 1,187 | 635,704 | 636,891 | — | ||||||||||||||||||||
Residential – Multifamily | — | — | — | — | 68,258 | 68,258 | — | ||||||||||||||||||||
Consumer | — | — | — | — | 12,771 | 12,771 | — | ||||||||||||||||||||
Total Loans | $ | — | $ | 1,984 | $ | 5,348 | $ | 7,332 | $ | 1,413,417 | $ | 1,420,749 | $ | — |
December 31, 2018 | 30-59 Days Past Due | 60-89 Days Past Due | Greater than 90 Days and Not Accruing | Total Past Due | Current | Total Loans | Loans > 90 Days and Accruing | ||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||||
Commercial and Industrial | $ | — | $ | — | $ | 14 | $ | 14 | $ | 34,626 | $ | 34,640 | $ | — | |||||||||||||
Construction | — | — | 1,365 | 1,365 | 138,512 | 139,877 | — | ||||||||||||||||||||
Real Estate Mortgage: | |||||||||||||||||||||||||||
Commercial – Owner Occupied | — | — | — | — | 135,617 | 135,617 | — | ||||||||||||||||||||
Commercial – Non-owner Occupied | — | — | — | — | 321,580 | 321,580 | — | ||||||||||||||||||||
Residential – 1 to 4 Family | 81 | 154 | 1,686 | 1,921 | 543,470 | 545,391 | — | ||||||||||||||||||||
Residential – Multifamily | — | — | — | — | 49,628 | 49,628 | — | ||||||||||||||||||||
Consumer | 62 | — | — | 62 | 14,362 | 14,424 | — | ||||||||||||||||||||
Total Loans | $ | 143 | $ | 154 | $ | 3,065 | $ | 3,362 | $ | 1,237,795 | $ | 1,241,157 | $ | — |
Twelve Months Ended December 31, 2019 | |||||||||||||||||||||||||||||||
As of December 31, 2019 | Real Estate Mortgage | ||||||||||||||||||||||||||||||
(Dollars in thousands) | Commercial and Industrial | Construction | Commercial Owner Occupied | Commercial Non-owner Occupied | Residential 1 to 4 Family | Residential Multifamily | Consumer | Total | |||||||||||||||||||||||
December 31, 2018 | $ | 718 | $ | 1,694 | $ | 2,062 | $ | 5,853 | $ | 7,917 | $ | 621 | $ | 210 | $ | 19,075 | |||||||||||||||
Charge-offs | — | — | — | — | (56 | ) | — | — | (56 | ) | |||||||||||||||||||||
Recoveries | 16 | 6 | 26 | 39 | 5 | — | — | 92 | |||||||||||||||||||||||
Provisions | 230 | 1,107 | (65 | ) | (32 | ) | 1,285 | 198 | (23 | ) | 2,700 | ||||||||||||||||||||
Ending Balance December 31 2019 | $ | 964 | $ | 2,807 | $ | 2,023 | $ | 5,860 | $ | 9,151 | $ | 819 | $ | 187 | $ | 21,811 | |||||||||||||||
Allowance for loan losses | |||||||||||||||||||||||||||||||
Individually evaluated for impairment | $ | 286 | $ | 141 | $ | 33 | $ | 457 | $ | 211 | $ | — | $ | — | $ | 1,128 | |||||||||||||||
Collectively evaluated for impairment | 678 | 2,666 | 1,990 | 5,403 | 8,940 | 819 | 187 | 20,683 | |||||||||||||||||||||||
Balance at December 31, 2019 | $ | 964 | $ | 2,807 | $ | 2,023 | $ | 5,860 | $ | 9,151 | $ | 819 | $ | 187 | $ | 21,811 | |||||||||||||||
Loans | |||||||||||||||||||||||||||||||
Individually evaluated for impairment | $ | 286 | $ | 5,110 | $ | 4,833 | $ | 10,424 | $ | 1,445 | $ | — | $ | — | $ | 22,098 | |||||||||||||||
Collectively evaluated for impairment | 36,491 | 225,985 | 131,920 | 287,780 | 635,446 | 68,258 | 12,771 | 1,398,651 | |||||||||||||||||||||||
Balance at December 31, 2019 | $ | 36,777 | $ | 231,095 | $ | 136,753 | $ | 298,204 | $ | 636,891 | $ | 68,258 | $ | 12,771 | $1,420,749 |
Twelve Months Ended December 31, 2018 | |||||||||||||||||||||||||||||||
As of December 31, 2018 | Real Estate Mortgage | ||||||||||||||||||||||||||||||
(Dollars in thousands) | Commercial and Industrial | Construction | Commercial Owner Occupied | Commercial Non-owner Occupied | Residential 1 to 4 Family | Residential Multifamily | Consumer | Total | |||||||||||||||||||||||
December 31, 2017 | $ | 684 | $ | 2,068 | $ | 2,017 | $ | 4,630 | $ | 6,277 | $ | 627 | $ | 230 | $ | 16,533 | |||||||||||||||
Charge-offs | (128 | ) | (27 | ) | — | (49 | ) | — | — | (19 | ) | (223 | ) | ||||||||||||||||||
Recoveries | 47 | 600 | 189 | 86 | 43 | — | — | 965 | |||||||||||||||||||||||
Provisions | 115 | (947 | ) | (144 | ) | 1,186 | 1,597 | (6 | ) | (1 | ) | 1,800 | |||||||||||||||||||
Ending Balance December 31 2018 | $ | 718 | $ | 1,694 | $ | 2,062 | $ | 5,853 | $ | 7,917 | $ | 621 | $ | 210 | $ | 19,075 | |||||||||||||||
Allowance for loan losses | |||||||||||||||||||||||||||||||
Individually evaluated for impairment | $ | 14 | $ | 69 | $ | 36 | $ | 192 | $ | 299 | $ | — | $ | — | $ | 610 | |||||||||||||||
Collectively evaluated for impairment | 704 | 1,625 | 2,026 | 5,661 | 7,618 | 621 | 210 | 18,465 | |||||||||||||||||||||||
Balance at December 31, 2018 | $ | 718 | $ | 1,694 | $ | 2,062 | $ | 5,853 | $ | 7,917 | $ | 621 | $ | 210 | $ | 19,075 | |||||||||||||||
Loans | |||||||||||||||||||||||||||||||
Individually evaluated for impairment | $ | 14 | $ | 5,589 | $ | 2,441 | $ | 11,299 | $ | 2,514 | $ | — | $ | — | $ | 21,857 | |||||||||||||||
Collectively evaluated for impairment | 34,626 | 134,288 | 133,176 | 310,281 | 542,877 | 49,628 | 14,424 | 1,219,300 | |||||||||||||||||||||||
Balance at December 31, 2018 | $ | 34,640 | $ | 139,877 | $ | 135,617 | $ | 321,580 | $ | 545,391 | $ | 49,628 | $ | 14,424 | $1,241,157 |
December 31, 2019 | Recorded Investment | Unpaid Principal Balance | Related Allowance | ||||||||
(Dollars in thousands) | |||||||||||
With no related allowance recorded: | |||||||||||
Commercial and Industrial | $ | — | $ | — | $ | — | |||||
Construction | — | — | — | ||||||||
Real Estate Mortgage: | |||||||||||
Commercial – Owner Occupied | 2,702 | 2,702 | — | ||||||||
Commercial – Non-owner Occupied | 70 | 70 | — | ||||||||
Residential – 1 to 4 Family | 194 | 194 | — | ||||||||
Residential – Multifamily | — | — | — | ||||||||
Consumer | — | — | — | ||||||||
2,966 | 2,966 | — | |||||||||
With an allowance recorded: | |||||||||||
Commercial and Industrial | 286 | 292 | 286 | ||||||||
Construction | 5,110 | 9,600 | 141 | ||||||||
Real Estate Mortgage: | |||||||||||
Commercial – Owner Occupied | 2,131 | 2,131 | 33 | ||||||||
Commercial – Non-owner Occupied | 10,354 | 10,355 | 457 | ||||||||
Residential – 1 to 4 Family | 1,251 | 1,251 | 211 | ||||||||
Residential – Multifamily | — | — | — | ||||||||
Consumer | — | — | — | ||||||||
19,132 | 23,629 | 1,128 | |||||||||
Total: | |||||||||||
Commercial and Industrial | 286 | 292 | 286 | ||||||||
Construction | 5,110 | 9,600 | 141 | ||||||||
Real Estate Mortgage: | |||||||||||
Commercial – Owner Occupied | 4,833 | 4,833 | 33 | ||||||||
Commercial – Non-owner Occupied | 10,424 | 10,425 | 457 | ||||||||
Residential – 1 to 4 Family | 1,445 | 1,445 | 211 | ||||||||
Residential – Multifamily | — | — | — | ||||||||
Consumer | — | — | — | ||||||||
$ | 22,098 | $ | 26,595 | $ | 1,128 |
December 31, 2018 | Recorded Investment | Unpaid Principal Balance | Related Allowance | ||||||||
(Dollars in thousands) | |||||||||||
With no related allowance recorded: | |||||||||||
Commercial and Industrial | $ | — | $ | — | $ | — | |||||
Construction: | — | — | — | ||||||||
Real Estate Mortgage: | |||||||||||
Commercial – Owner Occupied | — | — | — | ||||||||
Commercial – Non-owner Occupied | — | — | — | ||||||||
Residential – 1 to 4 Family | 1,131 | 1,131 | — | ||||||||
Residential – Multifamily | — | — | — | ||||||||
Consumer | — | — | — | ||||||||
1,131 | 1,131 | — | |||||||||
With an allowance recorded: | |||||||||||
Commercial and Industrial | 14 | 19 | 14 | ||||||||
Construction: | 5,589 | 10,080 | 69 | ||||||||
Real Estate Mortgage: | |||||||||||
Commercial – Owner Occupied | 2,441 | 2,441 | 36 | ||||||||
Commercial – Non-owner Occupied | 11,299 | 11,299 | 192 | ||||||||
Residential – 1 to 4 Family | 1,383 | 1,383 | 299 | ||||||||
Residential – Multifamily | — | — | — | ||||||||
Consumer | — | — | — | ||||||||
20,726 | 25,222 | 610 | |||||||||
Total: | |||||||||||
Commercial and Industrial | 14 | 19 | 14 | ||||||||
Construction: | 5,589 | 10,080 | 69 | ||||||||
Real Estate Mortgage: | |||||||||||
Commercial – Owner Occupied | 2,441 | 2,441 | 36 | ||||||||
Commercial – Non-owner Occupied | 11,299 | 11,299 | 192 | ||||||||
Residential – 1 to 4 Family | 2,514 | 2,514 | 299 | ||||||||
Residential – Multifamily | — | — | — | ||||||||
Consumer | — | — | — | ||||||||
$ | 21,857 | $ | 26,353 | $ | 610 |
Year Ended December 31, | |||||||||||||||
2019 | 2018 | ||||||||||||||
Average Recorded Investment | Interest Income Recognized | Average Recorded Investment | Interest Income Recognized | ||||||||||||
(Dollars in thousands) | |||||||||||||||
Commercial and Industrial | $ | 127 | $ | 18 | $ | 15 | $ | 1 | |||||||
Commercial | 5,350 | 173 | 5,781 | 191 | |||||||||||
Real Estate Mortgage: | |||||||||||||||
Commercial – Owner Occupied | 3,956 | 126 | 3,372 | 134 | |||||||||||
Commercial – Non-owner Occupied | 11,275 | 624 | 11,850 | 606 | |||||||||||
Residential – 1 to 4 Family | 2,273 | 36 | 2,704 | 74 | |||||||||||
Residential – Multifamily | — | — | — | — | |||||||||||
Consumer | — | — | 16 | — | |||||||||||
Total | $ | 22,981 | $ | 977 | $ | 23,738 | $ | 1,006 |
• | Whether there is a period of current payment history under the current terms, typically 6 months; |
• | Whether the loan is current at the time of restructuring; and |
• | Whether we expect the loan to continue to perform under the restructured terms with a debt coverage ratio that complies with the Bank’s credit underwriting policy of 1.25 times debt service. |
1. | Good: Borrower exhibits the strongest overall financial condition and represents the most creditworthy profile. |
2. | Satisfactory (A): Borrower reflects a well-balanced financial condition, demonstrates a high level of creditworthiness and typically will have a strong banking relationship with the Bank. |
3. | Satisfactory (B): Borrower exhibits a balanced financial condition and does not expose the Bank to more than a normal or average overall amount of risk. Loans are considered fully collectable. |
4. | Watch List: Borrower reflects a fair financial condition, but there exists an overall greater than average risk. Risk is deemed acceptable by virtue of increased monitoring and control over borrowings. Probability of timely repayment is present. |
5. | Other Assets Especially Mentioned (OAEM): Financial condition is such that assets in this category have a potential weakness or pose unwarranted financial risk to the Bank even though the asset value is not currently impaired. The asset does not currently warrant adverse classification but if not corrected could weaken and could create future increased risk exposure. Includes loans which require an increased degree of monitoring or servicing as a result of internal or external changes. |
6. | Substandard: This classification represents more severe cases of #5 (OAEM) characteristics that require increased monitoring. Assets are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected. Assets are inadequately protected by the current net worth and paying capacity of the borrower or of the collateral. Asset has a well-defined weakness or weaknesses that impairs the ability to repay debt and jeopardizes the timely liquidation or realization of the collateral at the asset’s net book value. |
7. | Doubtful: Assets which have all the weaknesses inherent in those assets classified #6 (Substandard) but the risks are more severe relative to financial deterioration in capital and/or asset value; accounting/evaluation techniques may be questionable and the overall possibility for collection in full is highly improbable. Borrowers in this category require constant monitoring, are considered work out loans and present the potential for future loss to the Bank. |
At December 31, 2019 | Pass | OAEM | Substandard | Doubtful | Total | ||||||||||||||
(Dollars in thousands) | |||||||||||||||||||
Commercial and Industrial | $ | 36,491 | $ | — | $ | 286 | $ | — | $ | 36,777 | |||||||||
Construction | 219,289 | 4,275 | 7,531 | — | 231,095 | ||||||||||||||
Real Estate Mortgage: | |||||||||||||||||||
Commercial – Owner Occupied | 134,051 | — | 2,702 | — | 136,753 | ||||||||||||||
Commercial – Non-owner Occupied | 298,006 | — | 198 | — | 298,204 | ||||||||||||||
Residential – 1 to 4 Family | 634,937 | 920 | 1,034 | — | 636,891 | ||||||||||||||
Residential – Multifamily | 68,258 | — | — | — | 68,258 | ||||||||||||||
Consumer | 12,771 | — | — | — | 12,771 | ||||||||||||||
Total | $ | 1,403,803 | $ | 5,195 | $ | 11,751 | $ | — | $ | 1,420,749 |
At December 31, 2018 | Pass | OAEM | Substandard | Doubtful | Total | ||||||||||||||
(Dollars in thousands) | |||||||||||||||||||
Commercial and Industrial | $ | 34,626 | $ | — | $ | 14 | $ | — | $ | 34,640 | |||||||||
Construction: | 127,523 | 4,503 | 7,851 | — | 139,877 | ||||||||||||||
Real Estate Mortgage: | |||||||||||||||||||
Commercial – Owner Occupied | 135,617 | — | — | — | 135,617 | ||||||||||||||
Commercial – Non-owner Occupied | 321,446 | — | 134 | — | 321,580 | ||||||||||||||
Residential – 1 to 4 Family | 542,865 | 719 | 1,807 | — | 545,391 | ||||||||||||||
Residential – Multifamily | 49,628 | — | — | — | 49,628 | ||||||||||||||
Consumer | 14,424 | — | — | — | 14,424 | ||||||||||||||
Total | $ | 1,226,129 | $ | 5,222 | $ | 9,806 | $ | — | $ | 1,241,157 |
2019 | |||
(Dollars in thousands) | |||
Balance, beginning of year | $ | 13,079 | |
Advances | 467 | ||
Less: repayments | (1,467 | ) | |
Balance, end of year | $ | 12,079 |
For the Year Ended December 31, | |||||||
2019 | 2018 | ||||||
(Dollars in thousands) | |||||||
Balance at beginning of period | $ | 5,124 | $ | 7,248 | |||
Real estate acquired in settlement of loans | 2,751 | 1,622 | |||||
Sales of OREO, net | (2,771 | ) | (2,847 | ) | |||
Valuation adjustments and donations | (377 | ) | (899 | ) | |||
Balance at end of period | $ | 4,727 | $ | 5,124 |
2019 | 2018 | ||||||
(Dollars in thousands) | |||||||
Demand deposits, noninterest-bearing | $ | 259,269 | $ | 360,329 | |||
Checking accounts | 55,606 | 52,721 | |||||
Money market deposits | 232,115 | 208,335 | |||||
Savings deposits | 105,554 | 131,127 | |||||
Time deposits of $250,000 or more | 123,787 | 59,455 | |||||
Other time deposits | 432,260 | 279,512 | |||||
Brokered time deposits | 130,628 | 92,394 | |||||
Total deposits | $ | 1,339,219 | $ | 1,183,873 |
Years Ending December 31, | (Dollars in thousands) | ||
2020 | $ | 534,185 | |
2021 | 141,210 | ||
2022 | 7,718 | ||
2023 | 2,483 | ||
2024 | 1,065 | ||
Thereafter | 14 | ||
Total | $ | 686,675 |
2019 | 2018 | ||||||||||||||
Maturity Date or Range | Amount | Weighted Average Rate | Amount | Weighted Average Rate | |||||||||||
(Dollars in thousands, except rates) | |||||||||||||||
Borrowed funds: | |||||||||||||||
Federal Home Loan Bank advances | Less than one year | $ | 112,150 | 2.33 | % | $ | 68,650 | 2.58 | % | ||||||
One to three years | 22,500 | 2.84 | % | 36,000 | 2.85 | % | |||||||||
Total | $ | 134,650 | $ | 104,650 | |||||||||||
Subordinated debentures, capital trusts | November 2035 | $ | 5,155 | 3.57 | % | $ | 5,155 | 4.31 | % | ||||||
November 2035 | 5,155 | 3.57 | % | 5,155 | 4.31 | % | |||||||||
September 2037 | 3,093 | 3.39 | % | 3,093 | 4.29 | % | |||||||||
Total | $ | 13,403 | $ | 13,403 |
Estimated Useful lives | 2019 | 2018 | |||||||
(Dollars in thousands) | |||||||||
Land | $ | 1,044 | $ | 1,044 | |||||
Building and improvements | 12 years | 7,233 | 7,191 | ||||||
Furniture and equipment | 5 years | 3,628 | 3,076 | ||||||
Total premises and equipment | 11,905 | 11,311 | |||||||
Less: accumulated depreciation and amortization | (4,959 | ) | (4,528 | ) | |||||
Premises and equipment, net | $ | 6,946 | $ | 6,783 |
Dollars in thousands | 2019 | ||
Lease right of use assets (ROU) | $ | 2,544 | |
Lease liabilities | $ | 2,544 |
Years Ending December 31, | (Dollars in thousands) | ||
2020 | $ | 309 | |
2021 | 319 | ||
2022 | 290 | ||
2023 | 250 | ||
2024 | 252 | ||
Thereafter | 26,211 | ||
Total undiscounted lease payments | $ | 27,631 |
Options | Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life | Aggregate Intrinsic Value | ||||||
Outstanding at January 1, 2019 | 291,584 | $14.36 | ||||||||
Granted | — | $— | ||||||||
Exercised | (15,584 | ) | $8.59 | |||||||
Expired/terminated | (5,324 | ) | $8.59 | |||||||
Outstanding at December 31, 2019: | 270,676 | $14.80 | 7.2 | $ | 2,822,610 | |||||
Exercisable at December 31, 2019: | 106,577 | $11.75 | 6.7 | $ | 1,437,151 |
2019 | 2018 | ||||||
(Dollars in thousands) | |||||||
Current tax expense: | |||||||
Federal | $ | 7,719 | $ | 6,593 | |||
State | 2,229 | 1,726 | |||||
9,948 | 8,319 | ||||||
Deferred tax benefit/expense | (163 | ) | 58 | ||||
Income tax expense | $ | 9,785 | $ | 8,377 |
2019 | 2018 | ||||||
(Dollars in thousands) | |||||||
Deferred tax assets: | |||||||
Allowance for loan losses | $ | 5,350 | $ | 4,611 | |||
Supplemental Executive Retirement Plan ("SERP") | 1,459 | 1,321 | |||||
OREO writedowns | 480 | 1,191 | |||||
Nonaccrued interest | 466 | 296 | |||||
Non-qualified stock options and restricted stock | 59 | 39 | |||||
Write-down on partnership investment | 134 | 132 | |||||
Unrealized loss | — | 197 | |||||
Other | 84 | — | |||||
8,032 | 7,787 | ||||||
Valuation allowance | (134 | ) | (132 | ) | |||
Deferred tax liabilities: | |||||||
Depreciation | (106 | ) | (54 | ) | |||
Partnership income | (67 | ) | (28 | ) | |||
Unrealized gain | (29 | ) | — | ||||
Deferred loan costs | (1,249 | ) | (1,062 | ) | |||
Net deferred tax asset | $ | 6,447 | $ | 6,511 |
2019 | 2018 | ||||||
(Dollars in thousands) | |||||||
At Federal statutory rate | $ | 8,415 | $ | 7,017 | |||
Adjustments resulting from: | |||||||
State income taxes, net of Federal tax benefit | 1,677 | 1,530 | |||||
Non-controlling interest | (94 | ) | (45 | ) | |||
Tax exempt income | (11 | ) | (12 | ) | |||
BOLI | (126 | ) | (129 | ) | |||
Stock compensation | (9 | ) | (3 | ) | |||
Nondeductible expenses | 1 | — | |||||
Other | (68 | ) | 19 | ||||
$ | 9,785 | $ | 8,377 |
2019 | 2018 | ||||||
(Dollars in thousands) | |||||||
Benefit obligation, January 1 | $ | 5,521 | $ | 4,901 | |||
Service cost | 226 | 417 | |||||
Interest cost | 289 | 268 | |||||
Benefits paid | (87 | ) | (65 | ) | |||
Accrued liability at December 31 | $ | 5,949 | $ | 5,521 |
2019 | 2018 | ||||||
(Dollars in thousands) | |||||||
Service cost | $ | 226 | $ | 417 | |||
Interest cost | 289 | 268 | |||||
$ | 515 | $ | 685 |
As of December 31, 2019 | Actual | For Capital Adequacy Purpose | For Capital Adequacy Purposes with Capital Conservation Buffer * | To be Well Capitalized Under Prompt Corrective Action Provisions | |||||||||||||
Company | Amount | Ratio | Amount | Ratio | Amount | Ratio | Amount | Ratio | |||||||||
(Dollars in thousands except ratios) | |||||||||||||||||
Total risk-based capital | $ | 208,013 | 16.70% | $ | 99,654 | 8.00% | $ | 130,795 | 10.50% | $ | 124,567 | 10.00 | % | ||||
Tier 1 risk-based capital | 192,365 | 15.44% | 74,740 | 6.00% | 105,882 | 8.50% | 99,654 | 8.00 | % | ||||||||
Tier 1 leverage | 192,365 | 11.87% | 64,802 | 4.00% | 64,802 | 4.00% | 81,002 | 5.00 | % | ||||||||
Tier 1 common equity | 177,068 | 14.21% | 56,055 | 4.50% | 87,197 | 7.00% | 80,969 | 6.50 | % | ||||||||
Parke Bank | |||||||||||||||||
Total risk-based capital | $ | 207,620 | 16.67% | $ | 99,621 | 8.00% | $ | 130,752 | 10.50% | $ | 124,526 | 10.00 | % | ||||
Tier 1 risk-based capital | 191,977 | 15.42% | 74,716 | 6.00% | 105,847 | 8.50% | 99,621 | 8.00 | % | ||||||||
Tier 1 leverage | 191,977 | 11.85% | 64,785 | 4.00% | 64,785 | 4.00% | 80,982 | 5.00 | % | ||||||||
Tier 1 common equity | 190,158 | 15.27% | 56,037 | 4.50% | 87,168 | 7.00% | 80,942 | 6.50 | % |
As of December 31, 2018 | Actual | For Capital Adequacy Purpose | For Capital Adequacy Purposes with Capital Conservation Buffer * | To be Well Capitalized Under Prompt Corrective Action Provisions | |||||||||||||
Company | Amount | Ratio | Amount | Ratio | Amount | Ratio | Amount | Ratio | |||||||||
(Dollars in thousands except ratios) | |||||||||||||||||
Total risk-based capital | $ | 182,316 | 16.73% | $ | 87,164 | 8.00% | $ | 107,592 | 9.88% | $ | 108,954 | 10.00 | % | ||||
Tier 1 risk-based capital | 168,629 | 15.48% | 65,373 | 6.00% | 85,802 | 7.88% | 87,164 | 8.00 | % | ||||||||
Tier 1 leverage | 168,629 | 12.15% | 55,503 | 4.00% | 55,503 | 4.00% | 69,378 | 5.00 | % | ||||||||
Tier 1 common equity | 153,020 | 14.04% | 49,029 | 4.50% | 69,458 | 6.38% | 70,820 | 6.50 | % | ||||||||
Parke Bank | |||||||||||||||||
Total risk-based capital | $ | 181,760 | 16.69% | $ | 87,131 | 8.00% | $ | 107,552 | 9.88% | $ | 108,913 | 10.00 | % | ||||
Tier 1 risk-based capital | 168,078 | 15.43% | 65,348 | 6.00% | 85,769 | 7.88% | 87,131 | 8.00 | % | ||||||||
Tier 1 leverage | 168,078 | 12.10% | 55,569 | 4.00% | 55,569 | 4.00% | 69,461 | 5.00 | % | ||||||||
Tier 1 common equity | 166,639 | 15.30% | 49,011 | 4.50% | 69,432 | 6.38% | 70,794 | 6.50 | % |
1) | Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. |
1) | Quoted prices for similar assets or liabilities in active markets. |
2) | Quoted prices for identical or similar assets or liabilities in markets that are not active. |
3) | Inputs other than quoted prices that are observable, either directly or indirectly, for the term of the asset or liability (e.g., interest rates, yield curves, credit risks, prepayment speeds or volatilities) or “market corroborated inputs.” |
1) | Prices or valuation techniques that require inputs that are both unobservable (i.e. supported by little or no market activity) and that are significant to the fair value of the assets or liabilities. |
2) | These assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. |
Financial Assets | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
(Dollars in thousands) | ||||||||||||||||
Investment securities and loans held for sale | ||||||||||||||||
As of December 31, 2019 | ||||||||||||||||
Corporate debt obligations | $ | — | $ | 500 | $ | — | $ | 500 | ||||||||
Residential mortgage-backed securities | — | 26,075 | — | 26,075 | ||||||||||||
Collateralized mortgage-backed securities | — | 38 | — | 38 | ||||||||||||
Loans held for sale | 190 | 190 | ||||||||||||||
Total | $ | — | $ | 26,803 | $ | — | $ | 26,803 | ||||||||
As of December 31, 2018 | ||||||||||||||||
Corporate debt obligations | $ | — | $ | 500 | $ | — | $ | 500 | ||||||||
Residential mortgage-backed securities | — | 30,721 | — | 30,721 | ||||||||||||
Collateralized mortgage-backed securities | — | 57 | — | 57 | ||||||||||||
Loans held for sale | 419 | 419 | ||||||||||||||
Total | $ | — | $ | 31,697 | $ | — | $ | 31,697 |
Financial Assets | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
(Dollars in thousands) | ||||||||||||||||
As of December 31, 2019 | ||||||||||||||||
Collateral dependent impaired loans | $ | — | $ | — | $ | 8,460 | $ | 8,460 | ||||||||
OREO | $ | — | $ | — | $ | 4,727 | $ | 4,727 | ||||||||
As of December 31, 2018 | ||||||||||||||||
Collateral dependent impaired loans | $ | — | $ | — | $ | 6,921 | $ | 6,921 | ||||||||
OREO | $ | — | $ | — | $ | 5,124 | $ | 5,124 |
December 31, 2019 | Carrying Amount | Fair Value | |||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||
Financial Assets: | |||||||||||||||||||
Cash and cash equivalents | $ | 191,607 | $ | 191,607 | $ | 191,607 | $ | — | $ | — | |||||||||
Investment securities AFS | 26,613 | 26,613 | — | 26,613 | — | ||||||||||||||
Investment securities HTM | 1,167 | 1,430 | — | 1,430 | — | ||||||||||||||
Restricted stock | 7,440 | 7,440 | — | — | 7,440 | ||||||||||||||
Loans held for sale | 190 | 190 | — | 190 | — | ||||||||||||||
Loans, net | 1,398,938 | 1,393,288 | — | 1,372,317 | 20,971 | ||||||||||||||
Accrued interest receivable | 6,069 | 6,069 | — | 6,069 | — | ||||||||||||||
Financial Liabilities: | |||||||||||||||||||
Non-time deposits | $ | 652,544 | $ | 652,544 | $ | — | $ | 652,544 | $ | — | |||||||||
Time deposits | 686,675 | 692,177 | — | 692,177 | — | ||||||||||||||
Borrowings | 148,053 | 156,479 | — | 156,479 | — | ||||||||||||||
Accrued interest payable | 2,260 | 2,260 | — | 2,260 | — |
December 31, 2018 | Carrying Amount | Fair Value | |||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||
Financial Assets: | |||||||||||||||||||
Cash and cash equivalents | $ | 154,471 | $ | 154,471 | $ | 154,471 | $ | — | $ | — | |||||||||
Investment securities AFS | 31,278 | 31,278 | — | 31,278 | — | ||||||||||||||
Investment securities HTM | 1,113 | 1,292 | — | 1,292 | — | ||||||||||||||
Restricted stock | 5,858 | 5,858 | — | — | 5,858 | ||||||||||||||
Loans held for sale | 419 | 419 | — | 419 | — | ||||||||||||||
Loans, net | 1,222,082 | 1,209,223 | — | 1,187,975 | 21,248 | ||||||||||||||
Accrued interest receivable | 5,191 | 5,191 | — | 5,191 | — | ||||||||||||||
Financial Liabilities: | |||||||||||||||||||
Non-time deposits | $ | 752,512 | $ | 752,512 | $ | — | $ | 752,512 | $ | — | |||||||||
Time deposits | 431,361 | 433,575 | — | 433,575 | — | ||||||||||||||
Borrowings | 118,053 | 118,965 | — | 118,965 | — | ||||||||||||||
Accrued interest payable | 1,390 | 1,390 | — | 1,390 | — |
Balance Sheets | December 31, | ||||||
2019 | 2018 | ||||||
(Dollars in thousands) | |||||||
Assets: | |||||||
Cash | $ | 2,086 | $ | 2,049 | |||
Investments in subsidiaries | 190,217 | 166,173 | |||||
Other assets | 2 | 3 | |||||
Total assets | $ | 192,305 | $ | 168,225 | |||
Liabilities and Equity: | |||||||
Subordinated debentures | $ | 13,403 | $ | 13,403 | |||
Other liabilities | 1,700 | 1,502 | |||||
Equity | 177,202 | 153,320 | |||||
Total liabilities and equity | $ | 192,305 | $ | 168,225 | |||
Statements of Income | Years ended December 31, | ||||||
2019 | 2018 | ||||||
(Dollars in thousands) | |||||||
Income: | |||||||
Dividends from bank subsidiary | $ | 7,300 | $ | 6,600 | |||
Total income | 7,300 | 6,600 | |||||
Expense: | |||||||
Interest on subordinated debentures | $ | 541 | $ | 491 | |||
Salary | 160 | 160 | |||||
Other expenses | 127 | 122 | |||||
Total expenses | 828 | 773 | |||||
Net Income | 6,472 | 5,827 | |||||
Equity in undistributed income of subsidiaries | 23,369 | 18,997 | |||||
Net income | 29,841 | 24,824 | |||||
Preferred stock dividend and discount accretion | (24 | ) | (446 | ) | |||
Net income available to common shareholders | $ | 29,817 | $ | 24,378 |
Statements of Cash Flows | |||||||
Years ended December 31, | |||||||
2019 | 2018 | ||||||
(Dollars in thousands) | |||||||
Cash Flows from Operating Activities | |||||||
Net income | $ | 29,841 | $ | 24,824 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Equity in undistributed earnings of subsidiaries | (23,369 | ) | (18,997 | ) | |||
Changes in | |||||||
Increase in other assets | (1 | ) | (2 | ) | |||
Increase in accrued interest payable and other accrued liabilities | (21 | ) | (4 | ) | |||
Other | 29 | 19 | |||||
Net cash provided by operating activities | 6,479 | 5,840 | |||||
Cash Flows from Financing Activities | |||||||
Proceeds from exercise of stock options | 48 | 43 | |||||
Payment of dividend on preferred stock and common stock | (6,490 | ) | (5,412 | ) | |||
Net cash used in financing activities | (6,442 | ) | (5,369 | ) | |||
Increase in cash and cash equivalents | 37 | 471 | |||||
Cash and Cash Equivalents, January 1, | 2,049 | 1,578 | |||||
Cash and Cash Equivalents, December 31, | $ | 2,086 | $ | 2,049 |
PARKE BANCORP, INC. | PARKE BANK | |
PARKE BANK | SENIOR EXECUTIVE MANAGEMENT | VICE PRESIDENTS |
BOARD OF DIRECTORS | Vito S. Pantilione | Liping Yuan |
Chief Executive Officer and President | Director of Financial Reporting | |
Celestino R. (“Chuck”) Pennoni | ||
Chairman of the Board | John F. Hawkins | Frank Zangari |
Founder and Chairman of | Executive Vice President and CFO | BSA Compliance |
Pennoni Associates | ||
Ralph Gallo | ASSISTANT VICE PRESIDENTS | |
Daniel J Dalton | Executive Vice President and COO | |
Vice Chairman of the Board | Jennifer Chen | |
Retired | Paul E. Palmieri | Renee D’Orazio |
Brown & Brown of New Jersey | Senior Vice President and Chief Credit Officer | Robert Dalton |
Patricia Dilks | ||
Fred G. Choate | Nicholas J. Pantilione | Annice Fanelli |
President of Greater Philadelphia | Senior Vice President and Chief Lending Officer | Roxanne Melfe |
Venture Capital Corporation | Marysharon Mitchell | |
Dolores M. Calvello | Christopher Nealis | |
Arret F. Dobson | Senior Vice President Construction Ln/Portfolio Mgr. | Justin Rader |
President White Oaks Country Club | Joan Santo | |
Linda Kaiser | Juan Taboada | |
Dr. Edward Infantolino | Vice President and Corporate Secretary | |
Retired | ||
President of Ocean Internal | VICE PRESIDENTS | BANKING OFFICES |
Medicine Associates, P.A. | www.parkebank.com | |
Kathleen Conover | ||
Anthony J. Jannetti | Retail Operations | WASHINGTON TOWNSHIP, NJ |
President of Anthony J. Jannetti, Inc. | Main Office | |
Denise DiPaola | 601 Delsea Drive | |
Jeffrey H. Kripitz | Business Development Officer/Marketing | (856) 256-2500 |
Retired | Kristen Tartaglia, Manager | |
Owner of Jeff Kripitz Agency | Gil Eubank | |
Loan Operations | 567 Egg Harbor Road | |
Elizabeth A. Milavsky | (856) 582-6900 | |
Retired | Ginger Heckman | Roxanne Melfe, Manager |
Executive Vice President and COO | Operations | |
COLLINGSWOOD, NJ | ||
Vito S. Pantilione | Anthony Lombardo | 1150 Haddon Avenue |
President and Chief Executive officer | Controller | (856) 858-0825 |
Parke Bank and Parke Bancorp Inc | Justin Radar, Manager | |
Martin Mabe | ||
Jack C. Sheppard, Jr. | Commercial Lending | GALLOWAY TOWNSHIP, NJ |
Senior Vice President with Arthur J. | 67 East Jimmie Leeds Road | |
Gallagher & Company | James Meadows | (609) 748-9700 |
Commercial Lending | Juan Taboada, Manager | |
William Mohnacs | NORTHFIELD, NJ | |
Commercial Lending | 501 Tilton Road | |
(609) 646-6677 | ||
Robert Orsini | Christopher Nealis, Manager | |
IT manager | ||
PHILADELPHIA, PA | ||
Lisa Perkins | 1610 Spruce Street | |
Operation Coordinator | (215) 772-1113 | |
Jennifer Chen, Manager | ||
Marlon Soriano | ||
Commercial Lending | 1032 Arch Street | |
(215) 982-1975 | ||
James Talarico | Jennifer Chen, Manager | |
Collections | ||
Kristen Tartaglia | ||
Business Development/Branch Manager |
SHAREHOLDER INFORMATION | ||
ADMINISTRATIVE OFFICES | STOCK TRANSFER AND REGISTRAR | |
601 Delsea Drive | Shareholders wishing to change the name, address or | |
Washington Township, NJ 08080 | ownership of stock, to report lost certificates or to | |
(856) 256-2500 | consolidate accounts are asked to contact the Company's | |
www.parkebank.com | stock registrar and transfer agent directly: | |
ANNUAL MEETING OF SHAREHOLDERS | COMPUTERSHARE | |
The Annual Meeting of Shareholders will be held on | Investor Services | |
April 21, 2020 at 10:00 a.m. at Terra Nova Restaurant, | P.O. Box 43078 | |
590 Delsea Drive, Sewell, New Jersey. | Providence, RI 02940-3078 | |
1-800-942-5909 | ||
INVESTOR RELATIONS | www.computershare.com | |
Copies of the Company’s earnings releases and | ||
financial publications, including the annual report on | INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | |
Form 10-K (without exhibits) filed with the Securities | RSM US LLP | |
and Exchange Commission are available without | 518 Township Line Road, Suite 300 | |
charge by contacting: | Blue Bell, PA 19422 | |
Annice Fanelli, Assistant Vice President | SPECIAL COUNSEL | |
(856) 256-2500 or | Jones Walker LLP | |
investorsrelations@parkebank.com | 499 South Capitol Street, SW | |
Suite 2600 | ||
Washington, DC 20003 |
Subsidiary | State or Other Jurisdiction Of Incorporation | Percentage Ownership | ||
Parke Bank | New Jersey | 100% | ||
Parke Capital Trust I | Delaware | 100% | ||
Parke Capital Trust II | Delaware | 100% | ||
Parke Capital Trust III | Delaware | 100% | ||
100% | ||||
Subsidiaries of Parke Bank | 100% | |||
PDL LLC | New Jersey | 51% | ||
1. | I have reviewed this Form 10-K of Parke Bancorp, Inc. for the year ended December 31, 2019; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: | March 13, 2020 | /s/ Vito S. Pantilione |
Vito S. Pantilione | ||
President and Chief Executive Officer |
1. | I have reviewed this Form 10-K of Parke Bancorp, Inc. for the year ended December 31, 2019; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: | March 13, 2020 | /s/ John F. Hawkins |
John F. Hawkins | ||
Senior Vice President and Chief Financial Officer |
/s/ Vito S. Pantilione | /s/ John F. Hawkins | |
Vito S. Pantilione | John F. Hawkins | |
President and Chief Executive Officer | Senior Vice President and Chief Financial Officer | |
(Principal Executive Officer) | (Principal Financial Officer) |
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OREO |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Real Estate [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
OREO | OREO Other real estate owned (OREO) at December 31, 2019 was $4.7 million, compared to $5.1 million at December 31, 2018, a decreased of $397,000. The OREO balances for 2019 and 2018 are included in the other assets in the balance sheets. The real estate owned at, December 31, 2019, consisted of nine properties, the largest being a commercial building being carried at $2.0 million. During 2019, the Company disposed of $2.8 million of OREO, recognizing a gain of $86,000, compared to $2.8 million of OREO sold in 2018, recognizing a gain of $209,000. Also during 2019, the Company wrote down OREO property by $332,000, compared to $899,000 of write-downs in 2018, based on a decline in appraised values. Operating expenses related to OREO, net of related income, for 2019 and 2018, were $415,000 and $611,000, respectively. An analysis of OREO activity for the years ended December 31, 2019 and 2018 is as follows:
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Leases |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases | Leases We lease three retail branches and a parcel of land for a retail branch location. These leases generally have remaining terms of 6 years or less except the land lease, which has a remaining lease term of eighty-six years. Some of the leases may include options to renew the leases. The exercise of lease renewal is at our sole discretion. When we adopted the Accounting Standards Update (ASU) 2016-02, we recognized operating right-of-use assets and lease liabilities each for $2.8 million. At adoption of ASU 2016-02, we elected the practical expedients package, which allows us to not reassess the lease classification for any existing leases. All our leases existed before the adoption of the new lease standard were measured under operating leases according to the applicable GAAP standard then. As the result, we have recorded all our lease as operating leases. Our right-of-use assets and lease liabilities for operating leases are included in other assets and other liabilities on our consolidated balance sheets. We use interest rate implicit in the lease or incremental borrowing rate in determining the present value of lease payments. At December 31, 2019, we had future minimum lease payments of $27.6 million and imputed interest $25.1 million and lease liability $2.5 million. The weighted average remaining lease term was 50.99 year and weighted average discount rate was 7.28% at December 31, 2019, respectively. We also sublease some space of the one of our leased facilities to a company. Our operating lease expense is included in occupancy expenses within non-interest expense in our consolidated statements of income. Total operating lease expense consists of operating lease cost, which is recognized on a straight-line basis over the lease term, and variable lease cost, which is recognized based on actual amounts incurred. The following table presents information about our operating leases at the year ended December 31, 2019.
The following table presents future undiscounted cash flows on our operating leases:
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Fair Value (Tables) |
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Dec. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets and Liabilities Measured at Fair Value on a Recurring Basis | The table below presents the balances of assets and liabilities measured at fair value on a recurring basis at December 31, 2019 and 2018.
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Fair Value on a Non-Recurring Basis | Certain assets and liabilities are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment).
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Summary of Carrying Value and Fair Value of Financial Instruments | The following table summarizes the carrying amounts and fair values for financial instruments at December 31, 2019 and December 31, 2018:
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Shareholders' Equity (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity Note [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Stock Options Activity | The following table summarizes stock option activity of employees and directors for the year ended December 31, 2019.
* The data above did not give retrospectively adjustment for the assumed stock dividend declared in January 2020. |
Deposits (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deposits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Deposits | Deposits at December 31, 2019 and 2018, consisted of the following:
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Scheduled Maturities of Certificates of Deposit | Scheduled maturities of certificates of deposit at December 31, 2019 are as follows:
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OREO (Details) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2019
USD ($)
property
|
Dec. 31, 2018
USD ($)
|
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Real Estate [Abstract] | ||
Decrease in real estate owned | $ (397) | |
Number of real estate properties owned | property | 9 | |
Real estate, not qualify for sales treatment | $ 2,000 | |
Sales of OREO, net | 2,771 | $ 2,847 |
Gains on sales of real estate | 86 | 209 |
Write down of real estate carrying values | 332 | 899 |
OREO expense, net of related income | 415 | 611 |
Other Real Estate [Roll Forward] | ||
Balance at beginning of period | 5,124 | 7,248 |
Real estate acquired in settlement of loans | 2,751 | 1,622 |
Sales of OREO, net | (2,771) | (2,847) |
Valuation adjustments and donations | (377) | (899) |
Balance at end of period | $ 4,727 | $ 5,124 |
Leases - Narrative (Details) $ in Thousands |
12 Months Ended | |
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Dec. 31, 2019
USD ($)
branch
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Jan. 01, 2019
USD ($)
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Lessee, Lease, Description [Line Items] | ||
Number of retail branches | branch | 3 | |
Remaining lease term except the land lease | 6 years | |
Remaining lease term of land lease | 86 years | |
Operating lease, right-of-use asset | $ 2,544 | |
Operating lease, liability | 2,544 | |
Future minimum lease payments | 27,631 | |
Imputed interest | $ 25,100 | |
Weighted average remaining lease term (in years) | 50 years 11 months 26 days | |
Weighted average discount rate | 7.28% | |
Accounting Standards Update 2016-02 | ||
Lessee, Lease, Description [Line Items] | ||
Operating lease, right-of-use asset | $ 2,800 | |
Operating lease, liability | $ 2,800 |
Loans and Allowance for Loan and Lease Losses - Related Party Loans (Details) $ in Thousands |
12 Months Ended |
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Dec. 31, 2019
USD ($)
| |
Related party loans [Roll Forward] | |
Balance, beginning of year | $ 13,079 |
Advances | 467 |
Less: repayments | (1,467) |
Balance, end of year | $ 12,079 |
Regulatory Matters |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Broker-Dealer, Net Capital Requirement, SEC Regulation [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Regulatory Matters | Regulatory Matters Banks and bank holding companies are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations, involve quantitative measures of assets, liabilities, and certain off-balance-sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet capital requirements can result in regulatory action. The final rules implementing Basel Committee on Banking Supervision's capital guidelines for U.S. banks (Basel III rules) became effective for the Company on January 1, 2015 with full compliance with all of the requirements being phased in over a multi-year schedule, and fully phased in by January 1, 2019. Under the Basel III rules, the Company must hold a capital conservation buffer above the adequately capitalized risk-based capital ratios. The capital conservation buffer is being phased in from 0.0% for 2015 to 2.50% by 2019. The capital conservation buffer is 2.5% and 1.875 for 2019 and 2018, respectively. The Bank made a one-time election to opt-out the net unrealized gain or loss on available for sale securities in computing regulatory capital. At December 31, 2019, the Bank was considered “well capitalized" under the regulatory framework for prompt corrective action. Prompt corrective action regulations provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition. If adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required. At year-end 2019 and 2018 the most recent regulatory notifications categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes have changed the institution's category. To be categorized as well capitalized, the Bank must maintain minimum total risk based, Tier 1 risk based, and Tier 1 leverage ratios as set forth in the following tables.
* The new capital rules require banks and covered financial institution holding companies to maintain a capital conservation buffer of at least 2.5% of risk-weighted assets over and above the minimum risk-based capital requirements. Institutions that do not maintain the required capital buffer will become subject to progressively more stringent limitations on the percentage of earnings that can be paid out in dividends or used for stock repurchases and on the payment of discretionary bonuses to senior executive management. The minimums under Basel III increased by 0.625% (the capital conservation buffer) annually until fully phased in, in 2019. The fully phased-in minimums are 10.5% (Total risk-based capital), 8.5% (Tier 1 risk-based capital), and 7.0% (Tier 1 common equity). In November 2019, Federal bank regulatory agencies finalized a rule that simplifies capital requirements for community banks by allowing them to optionally adopt a simple leverage ratio to measure capital adequacy, which removes requirements for calculating and reporting risk-based capital ratios for a qualifying community bank that have less than $10 billion in total consolidated assets, limited amounts of off-balance-sheet exposures and trading assets and liabilities, and a leverage ratio greater than 9 percent. The community bank leverage ratio framework will be effective on January 1, 2020. |
Parent Company Only Financial Statements |
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Condensed Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Parent Company Only Financial Statements | Parent Company Only Financial Statements Condensed financial information of the parent company only is presented in the following two tables:
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Investment Securities (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Investments in Available-for-sale and Held-to-maturity Securities | The following is a summary of the Company's investments in available for sale and held to maturity securities as of December 31, 2019 and 2018:
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Schedule of Investments Classified by Contractual Maturity | The amortized cost and fair value of debt securities classified as available for sale and held to maturity, by contractual maturity as of December 31, 2019, are as follows:
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Schedule Gross Unrealized Losses and Fair Value of Investments with Continuous Unrealized Loss Position | The following tables show the gross unrealized losses and fair value of the Company's investments which are aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at December 31, 2019 and December 31, 2018.
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Parent Company Only Financial Statements (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Condensed Financial Information of the Parent Company | Condensed financial information of the parent company only is presented in the following two tables:
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